ECB Says Greek Banks' Efforts Bearing Fruit but More Remain to be Done

Greek banks' efforts have started bearing fruit but the very high stock of non-performing loans remains a thorny issue, European Central Bank chief supervisor Daniele Nouy said Sunday.

"We must acknowledge that the efforts of Greek banks since 2015 have started bearing fruit," Nouy told Vima newspaper.

"Gradual progress is being made in reducing the very high stock of non-performing loans (NPLs). But dealing with NPLs in a sustainable way is still very much a work in progress. Greek banks must do more and do it faster.

The banks are burdened by around 100 billion euros ($119 billion) in non-performing loan exposures -- about half of overall lending -- and the issue has repeatedly been highlighted by the European Central Bank.

Nouy stressed that "the top priority for Greek banks is to significantly reduce the production of new NPLs by improving their credit underwriting criteria and to clean up their balance sheets.”

Efforts to clear the books in recent months have been disrupted by leftist protests at court houses that led notaries to repeatedly go on strike and to then take the process online.

The ECB'S Chair of the Supervisory Board insisted that the implementation of the laws regulating the electronic auctions of the foreclosed properties, can move faster.

"An effective and efficient implementation of e-auctions is essential,” she said.

The ECB is expected to publish the stress test results for Greece's four largest banks in May, before the end of the bailout program.

This timing, according to Nouy, will allow "follow up action, if needed, to be taken in good time".

Fitch ratings agency upgraded Greece two weeks ago from B- to B, with a positive outlook estimating that"general government debt sustainability will improve" thanks to "reduced political risks, a record of general government primary surpluses and additional fiscal measures legislated."