Bank and state officials who participate in the process of loan restructurings will be exempt from criminal and civil liability, according to a special clause to be included in a Justice Ministry bill. This is aimed at facilitating the process of restructuring, settlement, write-off and sale of the debts of corporations or taxpayers.
Being relieved of liability means that, unless there is suspicion of deceit, there can be no charges filed against those officials by the state, company shareholders or creditors regarding decisions taken in the context of loan restructurings.
The issue was decisively tabled by the country’s creditors in the context of the measures that should be taken to tackle the problem of nonperforming loans. Banks are also eager to see this measure implemented as they are unable to proceed with bold decisions for streamlining or saving enterprises or settling the debts of households and self-employed professionals.
The existing climate, where threats of legal action prevail, has made banks reluctant to restructure loans, and many enterprises are led to bankruptcy and resolution because in that way the lenders are not exposed to liability. Therefore, instead saving enterprises by settling their debts, it is preferred to let them go bust, a practice with multiple negative consequences not only for the entrepreneurs and employees but also for the entire economy.
Banks have committed to reducing their NPLs by 40 billion euros by 2019 and their nonperforming exposures from 106.9 billion today to 66.7 billion in three years’ time.