The evolution of the Non-Performing Loans in the Greek Banking Sector

CLC’s team, led by Mr. Apostolos Gaitanis, BSc, Economics A.U.E.B., FS Deals Associate, PwC Greece, mentored and supervised our students Alex David, Maria Douka, Melina Velissaratos, Modesti Markou and Orestis Mikelakis to carry out a research project on the Non-Performing Loans in the Greek Banking Sector.

The financial crisis of 2007-2008 revealed the fragility of the national economies and banks. Governments, Financial Institutions, and Regulatory Authorities followed a mix of conventional and extraordinary policies in order to enhance the robustness of the financial system and support global economic recovery. Greece was highly affected by the crisis and became a weakly performing economy for a long period. After years of austerity, capital controls, and memorandums, the country entered a growth path, yet its banking system had to overcome the burden of Non-Performing Loans (NPLs) that reached c. €112bn. (49,2%, June 2016). NPLs impeded the progress of the banks and hindered the expansion of their core business. The solution to this problem was given by the reduction of the total number of the banks, the concentration of the Greek banking system into 4 Systemic Banks (N.B.G., Piraeus Bank, Eurobank, and Alpha Bank), a series of large securitization transactions (Cairo, Galaxy, Sunrise I, Frontier, etc.), and governmental reforms. The aim of this is to focus on the evolution of Greece’s NPLs and discuss the future prospects of the Greek banking sector.

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