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Greek Banks Inch Toward Bad-Loan Relief With Complex Plans

Nikos Chrysoloras, Tom Beardsworth, Christos Ziotis, and Sotiris Nikas, (2018), “Greek Banks Inch Toward Bad-Loan Relief With Complex Plans”Bloomberg, 13 November

Greek authorities are moving forward with two different plans to save their banks from a downward spiral. Some would-be investors think they’re too clever by half.

To reduce non-performing loans, the Greek central bank is proposing a special-purpose vehicle created with the stricken lenders’ tax credits — themselves an accounting creation of the nation’s past debt restructuring. With those assets, the SPV could effectively become a “bad bank,” selling bonds and acquiring some 42 billion euros ($47 billion) of bad loans.

“It’s a highly complicated structured-finance transaction because it mixes complicated tax, legal and regulatory problems,” said Jerome Legras, head of research at Axiom Alternative Investments and a former veteran of Societe Generale SA’s structured-finance team. “It’s hard to see if there’s a genuine chance of having investors onboard.”

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