Handelsblatt: Greece threatened with a new debt crisis

With a new debt crisis, Greece is threatened if systemic banks fail to reduce "red loans," writes Handelsblatt.

The four systemic banks are struggling with increased spending and reduced revenues.

Net interest income, which traditionally accounts for 75% of business turnover, decreased by 14% in the first nine months, while operating expenses increased by 3.5% . The total losses of four banks after the payment of taxes amounted to 151 million euros at the end of the third quarter of 2018, almost double that of the same period last year, writes Handelsblatt in an article entitled " Set in 2019 for Greek banks "published by DW.

The financial paper notes in response to Athens: "There is no reason to think that the situation will soon improve, as Greek banks are facing enormous challenges.

By 2019, they should show greater determination in the drastic reduction of "red loans", which will have a negative impact on equity. Until now, however, systemic banks seem to be sufficiently capitalized. But almost 80% of the equity comes from tax refunds due to losses.

In the worst case, Greece will need new financial badistance

If banks fail to stabilize, the return of Greece to the markets is even more difficult, says the German financial newspaper. In the worst case, Greece will need new financial help from lenders. This makes non-performing loans a risk for the entire euro area. According to the Bank of Greece, the value of unproductive loans reached $ 84.7 billion in September. As a result, non-performing exposures represent 46.7% of bank credit.

For 2019, banks are planning 30,000 real estate auctions. At the same time, the government and TAIPE are collaborating with JP Morgan's technical support to create a "bad bank" in which "red loans" will be transferred to the tune of 15 billion euros and securitisations will be realized with the guarantee of the Greek state. It is highly likely that the project will be in line with the EU Competition Directorate-General, as it is based on a similar project involving Italian banks. It remains to be seen who will invest in these securities, given the bad credit of the Greek government.

All this shows how critical the bank's situation is closely related to Greece's solvency. The country is still far from returning to the markets.
The interest rate on the 10-year bond is at the prohibitive rate of 4.4%. No other country participating in a program is forced to pay such high interest rates to investors. Despite the $ 26 billion reserve that would be enough for the next two years, it is doubtful whether Greece will be able to return to the markets on satisfactory terms or whether it will be forced to recover the help of lenders. The answer to the question also depends on the evolution of the Greek banking sector. "