Changes to Tiresias rules to give reliable borrowers more credit

By Yiannis Papadoyiannis

The government and Greek banks are considering changing the rules governing the operation of the Tiresias credit profile database by introducing a more flexible system in order to handle the rise in bad loans. Sources have also told Kathimerini that the Bank of Greece is poised to choose an international consultant to help the central bank on the issue of nonperforming loans.

BoG sources say that there are currently no plans for the creation of a single bank, or “bad bank” to gather all bad loans from Greek lenders. Each bank will handle its load of bad loans internally, through the special units that have already been set up exclusively for this process.

In the next few weeks the government and the central bank, in cooperation with the consultant that will be selected, will draft a series of legislative and supervisory initiatives for the handling of bad loans and the reflation of the banking market.

In this context authorities are examining the revision of Tiresias regulations toward a more flexible framework and eventually toward the return of “bad” borrowers such as enterprises, freelancers and households to the category of solvent borrowers. Bank officials say that with 35 percent of loans in a state of definite delay, meaning they have not been serviced for 90 days or more, over 50 percent of borrowers have at one point been flagged by the credit warning system of Tiresias.

“As things stand, none of these borrowers can take out any loans,” said a bank official. “The objective is not only for bad loans to be dealt with but also for that part of the population that due to the crisis has been tagged insolvent to be able to return under certain conditions to the category of households and enterprises that deserve fresh credit,” the same official explained.

Of course the change to Tiresias regulations does not mean borrowers will be granted a debt write-off. More flexible regulations will only pertain to those who have actively shown they can be reliable and consistent. Banks have stressed they will not be lenient with borrowers who have used the crisis as a pretext to forfeit on their obligations or to share their losses with the credit system and therefore with responsible borrowers.