Greek NPL market snapshot

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In the aftermath of the financial crisis, non-performing loans (NPLs) have been a major concern for supervisors, policymakers and market participants across the EU. Volumes of non-performing loans of European banks have significantly reduced since 2015, according to the European Banking Authority’s (EBA) report on NPLs, Progress Made and Challenges Ahead, published in November 2019, and such reduction is mostly attributed to NPL sales and securitisations.

The severe economic shock caused by the COVID-19 pandemic and the exceptional measures that the public authorities at Union and Member State level have taken to support solvent undertakings to withstand the liquidity shortages have demonstrated the need for banks to be able to continue lending to SMEs. It is crucial to upgrade any existing tools and prepare new ones to allow banks to maintain and further enhance their capacity to make more credit available to the real economy; securitisation can form a key tool in this respect.

The European Commission announced on 24 July 2020 a Capital Markets Recovery Package as part of the Commission’s overall COVID-19 recovery strategy, proposing inter alia targeted amendments to the Securitisation Regulation. The aim of the proposed amendments is to encourage the use of securitisation as a tool to reduce the burden of NPLs on banks’ balance sheets, considering that non-performing exposures are expected to increase due to the COVID-19 crisis.1 The proposal is based upon the relevant analysis carried out by the EBA in 20192 and 2020.3

The Greek NPL market has also been affected by the magnitude of the economic decline that the pandemic has caused in the EU. Due to COVID-19, it is expected that the last quarter of 2020 and into 2021 will result in even more NPLs.

In this report we take a look at the Greek NPL market, examining the structural and tax considerations for the sale of Greek NPLs and how Ireland plays a role for the investors who purchase Greek NPLs.

1 European Commission’s Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2017/2402 laying down a general framework for securitization and creating a specific framework for simple, transparent and standardized securitization to help the recovery from the COVID-19 pandemic, COM(2020) 282 final.
2 Opinion of the EBA to the European Commission on the Regulatory Treatment of Non-Performing Exposure Securitisation, 23 October 2019.
3 Report on STS Framework for Synthetic Securitisation under Article 45 of Regulation (EU) 2017/2402, 6 May 2020.