towards deceleration seems to have set in, considering that the increase in 2015 as a whole surpassed €4 billion. bis central bankers ’ speeches despite the size of the problem, the capital base of the banking system remains strong, with the provision coverage ratio standing at 50 %. if one adds to this the value of collateral pledged, total risk coverage comes to 101 %, one of the highest in the eu. recognising the seriousness of the problem, the bank of greece, as early as in 2013, took a number of initiatives, either by conducting studies or by issuing legal acts and regulatory provisions to address npes. following a thorough analysis of the situation ( troubled assets review ), executive committee act no. 42 / 2014 was adopted, establishing a supervisory framework for the management of loans in arrears and non - performing loans, whereby banks are required to report, on a quarterly basis, in the most detailed manner at european level, data on their npes and the actions they have taken for their management, as well as their internal reorganisation for this purpose. a few months later, in the autumn of 2014, the bank of greece introduced a code of conduct for banks for the transparent, effective and, where appropriate, flexible treatment of cooperating borrowers facing difficulties in servicing their debt obligations. the code ensures that borrowers are provided with timely and comprehensive information and are protected against unfair treatment by creditors, and is geared towards promoting permanent and sustainable arrangements, whether forbearance or resolution and closure solutions. the bank of greece has worked closely with the relevant ministries on the preparation of legislation enabling the effective tackling of npes, such as law 4307 / 2014 ( “ corporate insolvency for smes ” ), amendments to law 3869 / 2010 ( “ household insolvency ” ) and, more recently, amendments to law 4354 / 2015 to permit the assignment of the management and the transfer of loan portfolios to specialised non - bank entities. by authority of that law, the bank of greece adopted executive committee acts nos 82 / 2016 and 95 / 2016 detailing the licencing framework for credit servicing firms, striking a balance between speed, transparency, efficiency and borrower protection. last but not least, the bank of greece, jointly with the single supervisory mechanism ( ssm ) of the european central bank, decided to set binding operational targets for all greek banks with a view to ensuring a reduction of npes over a horizon of three years

yannis stournaras : bank of greece ’ s monetary policy report 2015 - 2016 speech by mr yannis stournaras, governor of the bank of greece, to the standing committee on economic affairs of the hellenic parliament, athens, 11 july 2016. * 1. * * the completion of the first review has a positive effect on confidence and enhances the growth prospects the completion of the first review has a positive effect on confidence and enhances the growth prospects, with direct and indirect benefits, including : • first, the disbursement of successive loan tranches totalling €10. 3 billion. the first tranche of €7. 5 billion has already been disbursed ; of this amount, €5. 7 billion will be used for public debt servicing and €1. 8 billion will be used to settle part of general government arrears. the remaining amount of €2. 8 billion ( of which €1. 7 billion will be used to pay general government arrears ) will be released by autumn 2016, conditional on a number of prior actions in the following areas : the pension system ; bank corporate governance ; energy ; privatisations ; the general secretariat of public revenue ; and the labour, product and services markets. this should have a positive impact on liquidity and economic activity in the second half of 2016. • second, the recent decision of the ecb governing council to reinstate the waiver for greek government bonds, enabling greek banks to obtain low - cost financing from the european central bank ( ecb ). this development, along with a dissipation of uncertainty, the stabilisation of private sector deposits and the progress achieved in restructuring greek banks, has contributed to the lowering of the emergency liquidity assistance ( ela ) ceiling for greek banks by €9. 5 billion since late june, bringing it down to €58. 6 billion. • third, the eligibility of greek government bonds for inclusion in the ecb ’ s quantitative easing programme towards the end of 2016. this, together with the reinstatement of the waiver for greek government bonds and the resulting refinancing of greek banks at a lower cost, should have a sizeable beneficial effect, potentially amounting to €400 - 500 million, on banks ’ results. however, the indirect benefits, through e. g. upgrades of the credit ratings of the greek sovereign and greek banks, are expected to be even greater. the above developments are