BοG Governor Stournaras: Hercules program transformed Greece’s NPL landscape

Governor of the Bank of Greece Yannis Stournaras, emphasized that Greek banks have successfully reduced their non-performing loan (NPL) ratio to just over 5%. However, he warned that risks to financial stability remain.

Speaking at a conference in Lake Como, Italy, Stournaras noted that recent interest rate hikes, coupled with high inflation, have put pressure on the balance sheets of certain businesses and households.

Referring to Greece’s experience, Stournaras highlighted the role of the Hercules program in reducing NPLs. He stressed that its implementation provided a clear benefit by rapidly improving the banks’ balance sheets. Before Hercules, banks struggled to significantly improve asset quality, with NPL reduction largely coming from loan write-offs.

Stournaras added that the Hercules program completely transformed the landscape, especially for smaller institutions where managing NPLs has traditionally been more challenging.