International rating agency Moody’s describes Greece’s credit conditions as a thorn in the side of Greece’s credit rating, as while they have improved in recent years, they remain negative, with significant challenges on the lending front affecting the prospects of the economy and banks.

Despite the fact that banks have offloaded these nonperforming exposure (NPEs), they continue to remain in the system, while new loans are being issued that have not been tested in the economic cycle, as it points out.

Moody’s notes that credit conditions in Greece, which it rates as negative, have improved in the last three to four years, with a significant reduction in banks’ NPEs, which, however, remain higher than those of European bonds.

As it says, banks’ NPEs have decreased to 6 billion euros, or 3.8% of total loans (according to March 2025 data), from €47.2 billion (or 30% of loans) in December 2020.

Nevertheless, Moody’s points out that approximately €78.3 billion of nonperforming loans (NPL), which concern both households and businesses, remain in the hands of servicers and therefore affect the overall assessment of credit conditions in Greece.

The significant reduction in total credits reflects the removal of non-core assets from banks’ balance sheets, the securitization/sale of NPE portfolios and write-offs, Moody’s says.

Greek banks, however, have started to grant new loans, aiming to capitalize on the economic recovery and the positive effects of the Recovery Fund. According to the Bank of Greece, the net credit flow between June 2024 and June 2025 was significant, around €12.6 billion, it said.

“However, this new lending to the real economy, which mainly includes corporate loans as households continue to deleverage, has not yet been tested in a full economic cycle. This factor leads to the negative adjustment to our assessment of credit conditions in Greece,” Moody’s notes.

The agency, however, estimates that any potential risks to vulnerable borrowers are expected to be offset by the resilience of the business sector and new loans related to Recovery Fund projects, which will help banks’ performing loan portfolios continue to expand.

Original Story: Ekathimerini | Author: Eleftheria Kourtali
Edition: Prime Yield

Servicer doValue is paving the way for banks to repay part of the guarantees given by the Greek government in the context of the Hercules securitizations through the sale of two loan portfolios.

These are loans from Eurobank’s Cairo securitizations that were securitized through Hercules – that is, they were sold to doValue and have now been streamlined – i.e. they are being serviced.

Their transfer by the investors who had purchased these loans will allow the repayment of the guarantee given by the government through the issuance of senior notes, thus reducing the burden on the public debt. The senior notes are held by the banks on their balance sheets, which, in turn, once the transaction is implemented, will repay the government the guarantee corresponding to these loans.

The portfolios for sale are the Alexandria portfolio, worth 1.5 billion euros, which includes regulated loans of 2,700 large and medium-sized enterprises, and the Giza portfolio, worth approximately €200 million, which includes mortgage loans that are now considered serviced.

The two portfolios will be transferred to investors, to whom the relevant information has already been sent in order for them to express interest and then submit binding offers. The process is being run on behalf of doValue by doAdvice (a subsidiary of the Italian doValue Group) and the goal is to close the transactions by the end of the year.

The transfer of these loans to a third-party investor in turn paves the way for their return to the banks, which is the ultimate goal.

Revealing the importance that banks attach to the return of these loans is an analysis by the National Bank of Greece, which raises to €40 billion the loans that currently belong to funds and could gradually return to the market in the coming years, either as “cured” or as a mechanism for new financing, strengthening credit expansion.

According to National, cleaning up the balance sheets of Greek banks can offer a significant opportunity for new credit, as the loans managed by the servicers or the guarantees that these loans carry, namely real estate, will gradually begin to return to the market and to a healthy economy.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield