DBRS Morningstar Releases Commentary on Greece’s Hercules NPL Asset Protection Scheme

Will the hero of Greek banking be the planned asset protection scheme nicknamed Hercules? In this commentary, DBRS Ratings Limited (DBRS Morningstar) explores the potential impact of the Hercules Asset Protection Scheme (HAPS) on Greek banks and the country’s economic recovery.

Modelled after the GACS scheme in Italy, HAPS, which was approved by the European Commission on 10 October, would place pools of non-performing loans into a special-purpose vehicle and issue tranched notes to investors. The Greek state would then provide a public guarantee to the senior tranche, paid for by the structure at a market rate.

Although DBRS Morningstar does not believe HAPS will immediately transform Greece’s economic situation, it notes that the scheme might help to strengthen the country’s banks, which could aid recovery.

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