The extension of the Hercules program – the purpose of which is to facilitate the securitization and removal of non-performing loans from the balance sheets of the banks – until June 30, 2025 and the increase of its budget by 1 billion. euros was approved by the European Commission (s.s. Commission).
“Under the scheme, private special purpose vehicles buy non-performing loans from banks and sell securities to investors. The state provides a public guarantee for the less risky senior securities of the securitization agencies. In return, the state receives remuneration according to market conditions. The rest of the securities are either distributed to existing shareholders or sold to private investors”, says the Commission.
It is recalled that the Commission had initially approved the Hercules program in October 2019, for 18 months, which was then extended until October 2022, and after its expiration, the program resumed in November 2023. The extension approved today program will end on 30 June 2025, and the total budget of the scheme will increase from 2 billion euros to 3 billion euro.
“The regime has been instrumental in reducing non-performing loans in the Greek banking system from around 30% at the end of 2020 to less than 5% in June 2024. The extension will allow the less important Greek banks to benefit from the positive economic outlook of Greece and to bring the quality of their assets to more manageable levels, like the larger banks. The non-confidential version of the decision will be published under case number SA.116229 in the state aid register on the Commission’s website for competition once the confidentiality issues have been resolved,” the Commission concludes.