ATHENS, March 21 (Reuters) – Greek banks are limited in their ability to finance growth, ECB economists said in a blog on Saturday, despite a remarkable recovery from the economic crisis a decade ago, as a large part of the country’s private debt is outside the banking system.
The Greek banking sector, which was bailed out during the crisis, suffered big losses on Greek government bonds, a surge in bad loans and a sharp drop in deposits between 2010 and 2015.
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Non performing loans (NPL) reached almost 50% of their total loan portfolios, their deposits halved and they suffered multi billion losses from a ‘haircut’ on bonds they held.
As macroeconomic conditions stabilized and confidence returned, banks benefited from strong liquidity, higher profits and better capital conditions, the blog post, which is not necessarily the view of the European Central Bank, said.