Greece tables draft legislation expanding ‘Hercules’ program to reduce NPLs

The Greek government on Thursday tabled in Parliament a draft law seeking to further reduce non-performing loans in banks’ portfolios by expanding the “Hercules” program.

The draft legislation envisages measures to introduce greater transparency, more information and respect of debtors’ rights for servicers, modernize an out-of-court mechanism and expand protection for vulnerable debtors, improving the operating framework of a sale and leaseback agency, introducing measures to boost competition, such as loan offering from non-banking agencies, and expanding transactions through the IRIS system.

National Economy and Finance Minister Costis Hatzidakis said that the government’s intervention for banks and loans combined the goal of financial restructuring and the protection of vulnerable debtors with a series of modern and fair solutions.

Servicers will operate under new and stricter transparency rules, ensuring debtors are given more information.

The out-of-court mechanism becomes simpler, while the expansion of the Hercules programme will operate for the benefit of the banking system.

At the same time, competition in the banking system becomes more intense through initiatives such as the ability of non-banking agencies to offer housing and business loans.

The expanded Hercules programme, following an agreement reached with the European Commission, will have a guarantee offer ceiling of up to 2 billion euros and will last until December 31, 2024. The Greek state has offered guarantees worth 18.7 billion euros in the previous two phases of the programme, helping to reduce the stock of non-performing loans held by banks from 40.6% in December 2019 to 8.6% in June 2023.