John Iannis Mourmouras: Recent developments in tackling the Greek non-performing loans problem

Keynote speech by Professor John Iannis Mourmouras, Senior Deputy Governor of the Bank of Greece, at the 2nd Annual Investors' Conference on Greek & Cypriot NPLs, Athens, 13 February 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
14 February 2019

1. Introduction

Good morning, Ladies and Gentlemen,

It is my pleasure to deliver the keynote speech at the second Annual Investors' Conference on Greek and Cypriot NPLs, a very welcome initiative that draws the attention of all the relevant stakeholders on the NPL issue, of great interest to the local regulator too, which justifies my presence here in front of you. I would like to start by thanking the organisers, the Information Management Network and Jade Friedensohn, for the kind invitation, and all of you for being here so early in the morning.

Because of the criticality and the multidimensional aspects of the issue and a sense of urgency, some have called it the Achilles' heel of the Greek banking system; others the elephant in the room. I personally call it a problem, a problem that can be resolved and I see that the time has come. Over the last decade, the European Union and its Member States have worked hard to reduce risk in the banking sector. Indeed, the European banks average CET1 ratios are 15%, the highest level since 2014, while according to the latest ECB's stress tests results published last Monday, all banks improved capital basis with higher capital buffers than in 2016. Despite that, according to the recent SSM risk map for 2019, NPLs continue to pose risks to economic growth and financial stability with further efforts necessary to ensure that the NPL issue in the euro area is adequately addressed, while the ongoing search for yield, due to very low and negative interest rates, increases the potential for a build-up of future NPLs.