Greece-based bank loans subject to COVID-19 repayment relief hit USD 37 bln in 2020

Lenders granted payment deferrals to about 400,000 individuals and businesses between January and November 2020. The amount of loans under payment deferrals raises concerns that a chunk may become impaired when the period of grace ends, inflating the load of bad debt on banks' balance sheets.

The European Banking Authority said in December 2020 that a deferral period cannot exceed nine months, from the time a loan is placed under deferral status. In December 2020 Greece's central bank governor projected that banks were likely to be burdened by EUR 8-10 billion of new impaired loans as a result of the pandemic.

Banks had already been working to reduce a mountain of impaired credit, the legacy of a 10-year financial crisis that shrank the country's economy by a quarter. Despite the reduction of non-performing loans (NPLs) by about EUR 59 billion from a peak of EUR 106 billion in March 2016, banks' overall NPL ratio of 36% at the end of September 2020 remains far above the euro zone average of 2.9%.

The EUR 30 billion of loans under payment moratoria does not include another EUR 15 billion of mortgages and consumer and business loans already restructured, meaning banks have offered relief for EUR 45 billion of loans in total.