Economic uncertainty and the explosion of inflation, which affects middle incomes as well and makes the vast majority of households and businesses vulnerable—not in the strict legal sense—, is already reflected in payments their obligations.
Although no wave of defaults has been detected, Banks and servicers identify the first irregularities «because quite simply, people are struggling, mainly due to energy costs that have reached unprecedented levels,» according to a leading financial sector executive.
Proposal for a new «Bridge»
Information indicates that a proposal for a new «Bridge» program is on the table.» in line with the previous program that ran during the pandemic, which, for the vast majority, expired at the end of 2021 and gave thousands of borrowers some breathing space, while keeping the creation of new non-performing loans at low levels.
The issue is expected to be discussed at meeting to be held tomorrow under the Minister of Finance, Christos Staikouras, with the participation of banks and servicers, where an initial attempt will be made to assess the new data generated by the war in Ukraine.
And this is despite the fact that the impact of the pandemic on banks' assets has not yet been fully reflected, as pointed out by the Governor of the Bank of Greece. Yannis Stournaras. According to reports, the meeting will also include overview of the out-of-court debt settlement mechanism.
The effects of war
Quantifying the effects, especially the indirect ones, is the most difficult «exercise» not only for the financial system but for the economy as a whole, as they depend entirely on the resilience of state coffers. In tourism, for example, The absence of Russian tourists is considered a foregone conclusion, but what seems to be causing more concern is the possible decline in tourist traffic, mainly from major European markets such as Germany and Britain—but also from the US—as inflation gallops ahead, limiting disposable income. In addition, travel is becoming more expensive due to fuel costs and shipping and air transport costs have already skyrocketed. The increased cost of energy also has a direct and indirect impact on the overall tourism package.
In any case, any decisions made by the economic team in order to support borrowers and financial stability, they are included in the broader «package» of measures to address the new crisis and depend largely on today's decisions by the European Central Bank but also from the results of the Summit today and tomorrow in Versailles, attended by Christine Lagarde.
Banks, starting today with Eurobank, are beginning to announce their 2021 results., will discuss with analysts the impact of the war in Ukraine and how they will address them in order to «keep down» the creation of new non-performing exposures. It should be noted that low NPE rates are one of the prerequisites for a country to obtain investment grade status.
