The governor of the Bank of Greece predicted an increase in bad loans due to the rise in interest rates.
The governor of the Bank of Greece, Giannis Stournaras, predicted that we will have an increase in bad loans due to the rise in interest rates.
He predicts that the European Central Bank (ECB) will proceed with a smaller interest rate increase compared to the two previous times, when the ECB had increased them by 0.75%
Speaking in a live podcast of the Economic Post, Mr. Stournaras, characteristically stated that “we will have an increase in red loans. When you have a combination of an increase in installments due to an increase in interest rates, that is, the installment of the mortgage will also rise, the installments on the businesses that owe money to the banks. You also have the increase in the price of electricity, which is not great of course, because the state, especially in Greece, has given a lot of help, but this cannot continue indefinitely. We hope that when it stops, that the war has also stopped”.
He added that “in some bad loans we will have an increase”. However, he hastened to clarify that according to the Bank’s estimates, this increase will not be dramatic. “I believe that around 2024, Greek bad loans will converge as a percentage with the European average. Since ’24. We are still quite high,” he said characteristically.
On the subject of interest rates, he pointed out that “we will go to more reasonable increases”. Regarding deposit rates, he estimated that although the Central Bank does not have the authority to pressure the banks, they will “slowly” increase them.
With reference to the developments in the banking system, he said that while we only have four systemic banks, which gives a high degree of concentration, nevertheless “we have several non-systemic, cooperative ones, Attica, where mergers will be able to take place, but after they first strengthen their capital”. He revealed that there is an agreement with the European Supervisor (SSM) that when the corona virus is over, all non-systemic banks in Europe will also proceed with capital increases, so as to increase competition in the European banking system.
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