On Friday 9 April, the European Commission decided to validate the 18-month extension of the October 2019 Greek scheme to support the reduction of non-performing loans of the country’s banks, on the grounds that the scheme does not constitute State Aid.
The asset protection scheme (known as ‘Hercules’) provides for the Greek State to be remunerated at market conditions for the risk it will bear in providing a guarantee on securitised non-performing loans.
The asset protection scheme was approved by the Commission in October 2019 for an initial period of 18 months (see EUROPE 12346/6). Greece has notified the Commission of its intention to extend the scheme for a further 18 months, until October 2022.
If a Member State intervenes, as a private investor would do, and is remunerated for the risk assumed in a way a private investor would accept, such intervention does not constitute State Aid. The Commission has therefore concluded that the Greek measure does not constitute State Aid within the meaning of EU rules.
Greece estimated that, with this support, the non-performing loan ratio would have fallen from 43% at the end of 2019 to 27% at the end of March 2021. The current applications to the scheme of securitisations amount to 31.3 billion euros (gross book value) of non-performing loans.
Link: https://bit.ly/39WVtt1 (Original version in French by Lionel Changeur)