Brussels, 13 December 2024
The EU Commission has approved, under EU State aid rules, the prolongation of a Greek scheme (known as ‘Hercules’) aimed at facilitating the reduction of non-performing loans of Greek banks, on the basis that it remains free of any State aid.
The scheme aims at assisting banks in securitising and moving non-performing loans off their balance sheets. Under the scheme, private special purpose vehicles buy non-performing loans from the banks and sell notes to investors. The State provides a public guarantee for the senior, less risky notes of the securitisation vehicles. In exchange, the State receives a remuneration at market terms. The remaining notes are either distributed to existing shareholders or sold to private investors.
The Commission initially approved Hercules in October 2019, for a duration of 18 months, which was later prolonged until October 2022. After its expiry, the scheme was re-introduced in November 2023. The prolongation approved today extends the duration of the scheme to 30 June 2025. The overall budget of the scheme will also be increased from €2 to €3 billion.
The scheme has been a key contributor to the reduction of non-performing loans in Greece’s banking system from around 30% at the end of 2020 to under 5% as of June 2024. The prolongation will enable Greece’s less significant banks (LSIs) to also benefit from the positive economic outlook in Greece and improve their asset qualities to more manageable levels, in line with their larger peers.
The non-confidential version of the decision will be made available under the case number SA.116229 in the State aid register on the Commission’s competition website once confidentiality issues have been resolved.