Bad loans blamed for massive bank losses in Greece

ATHENS, June 25 (AFP): New Greek central bank governor Yannis Stournaras on Wednesday sounded the warning over the rising level of non-performing bank loans, saying they were largely to blame for 600 million euros worth of bank losses.

"Managing non-performing loans is an important problem," former finance minister Stournaras told a parliament committee which approved his appointment as Bank of Greece governor.

Non-performing loans are currently worth 77 billion euros ($105 billion) and their proportion to total loans is rising -- from 32 per cent last year to 33.5 per cent at the end of the first quarter, he said.

He added that combined bank losses of 600 million euros, registered in the first quarter of the year, were to a large extent caused by bad loans.

Stournaras (57) was finance minister for the last two years and is credited with creating a primary surplus in the economy last year -- the first in a decade.

A primary surplus is a budget surplus before taking debt servicing costs into account.

The Greek economy is also expected to register slim growth this year after a six-year recession.

Stournaras's move to the central bank came after the government was reshuffled earlier this month after sustaining losses in last month's European and local elections.