Window of Opportunity for Greece and Its Investors

by Hugo Dixon

International New York Times/Reuters
November 17, 2013

Greece has been the markets’ whipping boy for most of the past four years. But in the past few months sentiment has changed and international investors are bottom fishing — in particular for banking assets.

This gives the country a double opportunity: Lenders can use it to clean up their balance sheets by selling nonperforming loans — loans overdue for more than 90 days — and the state can privatize its stakes in the banks. Both should grab the chance while it lasts.

Greece’s banks have been in a terrible mess as a result of the crisis. Not only were they loaded up with government bonds, which eventually paid less than face value, but even the big four that survived are weighed down by about 65 billion euros, or about $88 billion, of nonperforming loans, equivalent to about a third of gross domestic product.

But a €40 billion recapitalization and restructuring of the sector, financed mainly by bailout money, has helped change investor perceptions. Several hedge funds — including Paulson — have invested in the banks.

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