Just when you thought it was safe to buy Greek Banks (which it is not!) based on the mainstream media narrative that Greece is now fixed, ekathimerini reports that not only are deposits flying out the door at unprecedented pace (albeit stalled by capital controls) but non-performing loans have increased dramatically in the last few weeks as hundreds of households and enterprises have stopped making their repayments either due to a genuine inability to pay or because of the general uncertainty in the economy that has seen transactions freeze.
Data from banks show that repayments declined to between 20 and 50 percent of performing loans, creating the conditions for a major increase in bad loans. This trend is in line with the estimates of the Bank of Greece, according to which NPLs amounted to 40 percent of the total at the end of 2014, with the likelihood they will grow further in the first half of the year.
As a reference point, there is a little over €210 billion in total Greek loans, both performing and non-performing, currently and about €120 billion in deposits. There is also about €90 billion in Emergency Liquidity Assistance from the ECB.
The total amount of bad loans (those which have remained unserviced for at least 90 days) has reached 100 billion euros, and the BoG data show that 70 percent of the loans that have entered payment programs remain nonperforming.
This is a major problem for the Greek Banks but even more so for The ECB as there is not much it can do to 'control' NPLs and given provisions for bad loans are a mere EUR40bn - there is a big hole here that no one is accounting for.
Although the recent deterioration is not yet reflected in the official indices, as it concerns payment delays of one or two months, the picture banks present is one of hundreds of households in payment schemes freezing their payments and entering the stage of partial delay. However, we will not get an idea of the full picture as long as banks remain closed.
But aside from that, Greece is fixed.