Bank of Greece Governor, and former minister of
finance, said in a speech in Slovenia that credit financing will be limited in
the Eurozone in general, until the completion of the bank stress tests. Then vital
factor which will play a role in bank credit financing will be the non-service
loans (red loans) especially in countries that have been hit harder by the
recession, such as Greece.
Under the assessment of the Governor of the Bank of Greece,
financial capital is scarce, and banks will tend to place capital into more
productive assets. As a priority of economic policy should be the expansion of
the sources of financing to the capital markets.
Expansion of a European market, according to the
Governor, for securitizing bank loans, characterized by quality, depthness, credibility
and transparency, could drive towards a better utilization of risk aversion,
and thus, reinforce the bank financing of small and medium size businesses.
The Governor said that after the recapitalization of
the Greek banking system in 2012, Greece began to reform and reorganize the
Greek banking system. Its dependency on financing from the eurosystem has been
reduced significantly, and banks now are in a position to make projections
(allowance for doubtful accounts) towards the risks from the red loans.
At the beginning of this year banks went ahead towards
a simulation of new stress tests and had a positive feedback from the markets.
As a result, banks went ahead to raise 8.3 billion euros in new capital, and
its shares issuance were covered beyond expectations.
Two systemic banks have repayed the state financing
giving to them in the form of preferred stock, while all four of the systemic banks
are under private control.
