Morgan Stanley: Banks are on the right course

Morgan Stanley sees that while steps have been taken to drastically reduce Greek banks' bad loans, several obstacles remain in their way. The international bank's report on Monday followed meetings between Morgan Stanley officials and representatives from the country's four systemic banks, as well as from Grivalia, the Bank of Greece and the Hellenic Financial Stability Fund.

Morgan Stanley continues to believe that Greek banks will achieve their NPE reduction targets by 2021, but this effort - regardless of the creation of a "bad bank" - will have to be boosted by the amendment of the Katseli law so as to encourage more defaulters to restructure their loans.

The changes planned for the Katseli law are generally perceived as positive but do have some problems, says Morgan Stanley. Although the criteria for the protection of debtors' main residences are expected to...