Germany’s international broadcaster Deutsche Welle (DW) takes an in-depth at the banking crisis afflicting Greece after eight exhausting years of financial crisis and the scandals that accompany it.
Greek banks may have survived economic depression, but they have been forced to pay a heavy price; they turned into barely profitable institutions, unable to lend.
The Greek banking situation is made worse by balance sheets that remained stuffed with nonperforming loans (NPLs). Loans that make up about €85 billion, or 40 percent of their balance sheets.
DW quotes a recent study by a leading Athens think tank that showed some seven in 10 Greeks struggling to cover monthly expenses and accumulated debts as the country’s anemic banking system continues to limit lending after eight exhausting years of austerity.
More than 85 percent of those surveyed say they remain unable to put aside even the smallest of sums for savings or retirement; about half of them anticipate the economy will get even worse in the coming year despite Greece’s exit from austerity.
Greece’s turnaround from a fiscal basket case to a country posting continuous budget surpluses was crucial in a decision by lenders last August to free the European Union’s worst economic performer from its bailout shackles.
Mortgages account for about one third of all bad loans and are mainly linked to cash-strapped Greeks left jobless and unable to pay their mortgages by the crisis.
The urgency of Greece’s NPLs has left the Athens government and the country’s central bank scrambling to stitch together a set of radical plans. A new insolvency law has also been drafted in recent days, preventing banks from foreclosing on most homeowners’ primary residences. This much to the chargin of the European Commission.
