Greece Moving Toward Taxpayer-Backed Bad Bank to Aid Lenders

The Bank of Greece is moving toward creating a taxpayer-funded bad bank that can soak up billions of euros in lenders’ soured loans without running afoul of European restrictions on state aid.

The country’s central bank has begun contacting investment banks and consultants to advise it on how to set up the vehicle, according to people familiar with the discussions, who asked not to be identified because the matter is private. The Bank of Greece is also in touch with the European Central Bank on the plans, though hasn’t yet received feedback, they said.