Greek NPL Market Update: Almost Five Years into HAPS

In this commentary, Morningstar DBRS reviews the evolution of the Hercules Asset Protection Scheme (commonly known as HAPS or Hercules) since its introduction in 2019 by the Hellenic Ministry of Economy and Finance.

Key highlights include:
-- HAPS has played a significant role in stabilising the Greek banking system by helping reduce the NPL ratios to single digits since their all-time highs reached in the year 2017.
-- Spanning 17 transactions led by the four Greek systemic banks, a total of EUR 19.2 billion in state guarantees has been provided to date within the programme.
-- As of June 2024, the balance of the senior guaranteed notes stood at about EUR 17.0 billion, an amortisation of around 11.5%, indicating that the majority of the business plans are still to be worked out.
-- Extended multiple times, the third renewal of HAPS could be the last instalment of the scheme
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"Considering that the main objective of the Hercules scheme was to strengthen the domestic banks by offloading NPLs, HAPS III could mark the last instalment of the Hellenic state guarantee programme," said Vassilis Panaghoulis, Assistant Vice President of European NPL Ratings at Morningstar DBRS. "Given the large amounts of NPLs to be worked out, both from systemic banks and LSIs, the focus now shifts to the CSFs and their ability to deliver."