From The Financial Times

January 14, 2019

Frances Coppola

This week’s collapse of Greece’s coalition government comes at a delicate time for the country’s suffering financial sector. Over the weekend Alexis Tsipras, prime minister, called a confidence vote in his government after Panos Kammenos, defence minister, resigned in protest over a deal with Macedonia to end a dispute over its name. If the Syriza government loses, there will be early elections.

This would, temporarily at least, disrupt plans for government involvement in much-needed bank reform. Greece’s banks have survived the country’s economic depression but they have paid a heavy price: they are barely profitable, their balance sheets are stuffed with non-performing loans and — crucially — they are not lending.

Business leaders and politicians are anxious to clean up the banks’ balance sheets. They hope that the return of bank lending will kick-start the ailing Greek economy. But the slowing global economy, and the return of domestic political instability, mean that the country may have left it too late.

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Link to full article in The Financial Times

 

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