Bad loans haunt Greek banks seeking new start

Mon Sep 7, 2015 2:29am EDT
 
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By Greg Roumeliotis and George Georgiopoulos

ATHENS (Reuters) - Turned down for a 10,000 euro ($11,100) loan, George Sarris is one of hundreds of thousands of small business owners shunned by Greek banks.

Pointing to the parliament building overlooking his small cafe in Athens' Syntagma Square, the 35-year-old blames Greece's turbulent politics for the troubles of its banking system.

"It took three years for the country to come close to turning around," said Sarris, referring to modest economic growth in the second half of 2014, which has since halted.

"After the January 25 elections it all went downhill. Now things are bleak. For me, there is no salvation here."

This is the background against which Greeks head to the polls again on Sept. 20, the country's fifth elections since its debt crisis started in 2009. The snap poll was triggered by the resignation of leftist Prime Minister Alexis Tsipras, whose agreement to an 86 billion euro bailout cost him the parliamentary majority of his coalition government.

Six months of wrangling with creditors had led to a 40 billion euro deposit run, culminating in Greek banks being shut and capital controls enforced at the end of June.

Greek banks were badly wounded and limited the little lending they did even further, fearful about their exposure to loans many borrowers may never be able to pay back.

This fear of a rise in so-called non-performing loans (NPLs) is a deterrent not only to the banks, but also to potential investors whose money is needed to recapitalize them.   Continued...

 
People walk past the headquarters of Bank of Greece in Athens, August 27, 2015. REUTERS/Alkis Konstantinidis