The Greek Parliament approved an asset protection scheme dubbed "Project Hercules," which is aimed at helping banks rid their balance sheets of billions of euros of bad debt, Kathimerini reported.

The scheme, which encourages banks to use securitization as a method of getting rid of toxic debt, will make up to €12 billion available for state-backed guarantees on the least-risky tranche of debt.

Greek government officials said they hope for the initiative to help banks off-load up to half of their toxic loans in the coming 18 months, according to the Dec. 12 report. About €75 billion of Greek loans are reportedly classed as nonperforming or at risk.

The plan got the green light from the European Commission on Oct. 10. Project Hercules is considered to be similar to Italy's GACS scheme, which also provides state-backed guarantees on certain types of securitized bad debt. GACS has helped Italian banks flush out over €62 billion in bad debts since its inception in 2016.

The ECB published an opinion on Project Hercules on Dec. 11, in which it warned that "clear drafting" of the law was imperative in order to attract third-party investors looking to buy securitized debt.

Greek Prime Minister Kyriakos Mitsotakis is scheduled to visit the ECB on Dec. 17, a spokesperson for the bank said.

Several Greek bank CEOs said in their third-quarter earnings calls that they planned to make use of Project Hercules. For example, Piraeus Bank SA's Christos Megalou said that he intended to make use of the scheme for the securitization of two portfolios of bad debt worth a combined €3 billion.