Greek central bank chief blames bad loans for massive bank losses

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

Athens: 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 percent last year to 33.5 percent 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.

Stournaras replaces 64-year-old governor George Provopoulos, who steered the central bank through two years of economic and political turmoil in 2011-2012, dominated by fears that Greece would default on its massive debt and be forced to leave the euro.

He also oversaw the recapitalisation and consolidation of Greece`s banking system after an unprecedented state debt write-down of over 100 billion euros in 2012.

Prime Minister Antonis Samaras said Provopoulos had played a "crucial" role in stabilising and recapitalising Greek banks "during the most difficult postwar period the country has faced."