Hercules transformed Greece’s banking landscape, Stournaras states

Bank of Greece Governor Yannis Stournaras on Friday noted that the country's banks have successfully reduced their nonperforming loan (NPL) ratio to just over 5%.

However, he also warned that risks to financial stability remain.

Speaking at a conference on NPLs organized by Banca Ifis 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 clear benefits 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...