Greece's progress in the banking sector and its economy was praised by European financial institutions mission chiefs on Thursday, during the 26th Annual Economist Government Roundtable that is being held in Athens on July 5-7.
The reduction of Greek banks' so-called 'red' (unserviceable/non-performing) loans near a 10 pct mark was called a "great step' by the European Commission's Mission Chief for Greece, Julia Lendvai, who also referred to the increase in their operational profitability.
This positive image, she said, will continue as long as the reforms also continue, which will contribute to Greece getting the desired investment grade.
She did, however, say that a great number of businesses in the private sector are over-indebted, and that this problem needs to be addressed so that viable businesses can grow and be modernized.
The same challenge was mentioned by European Central Bank (ECB) Mission Chief for Greece Martin Bijsterbosch, who said that the private sector still has a high volume of non-performing loans, which are undermining growth and need to be addressed.
Managing those, he said, will be extremely important for the economy, adding that a restructuring strategy is needed to complement the reduction of bad loans, along with a modernization of the relevant parts of the judicial system. These are, he said, problems known to the government, and that it is trying to resolve them.
European Stability Mechanism (ESM) Deputy Head of Financial Sector & Market Analysis and ESM Mission Chief for Greece, Paolo Fioretti, emphasized that confidence has been restored in Greece's banking sector, and he referred to the institutional changes made at European level in this direction, such as the steps taken towards the European banking union, which must be strengthened to reduce fragmentation.
Fioretti also referred to the need for digitization investments by Greek banks, and that they also need to improve the quality of their capital. He noted that the volume of government bonds they currently hold is low, but added that there is an 'umbilical cord' through government guarantees that needs to be reduced.