ATHENS, Greece — Lawmakers in Greece on Thursday approved a state guarantee system aimed reducing a massive volume of non-performing and troubled loans at private banks that built up during the country’s extended financial crisis. Parliament approved the so-called Hercules asset protection system that would make use of the state guarantees worth up to 12 billion euros ($13.4 billion). The plan would allow banks to more effectively securitize their soured loans, breaking them up into bundles graded by risk — a process similar to one recently rolled out in Italy. Greek loans worth around 75 billion euros ($83.4 billion) are currently considered to be non-performing or at risk. Around 40% of loans meet those criteria, according to central bank estimates, slowing the amount of credit available to businesses and hurting the country’s economic recovery. Government officials say they hope the plan will help banks dispose of up to half their soured loans over the next 18 months.
The Associated Press