BUSINESS

Banks poised to take action against thousands of ‘uncooperative’ borrowers

EVGENIA TZORTZI

TAGS: Banking

Some 300,000 borrowers and loan guarantors face severe action from Greek banks after failing to respond to warnings of overdue debts under a Code of Ethics process launched in 2015.

Greek banks have sent letters to around 1.2 million borrowers who have delayed paying back their loans, labeling 25 percent of them as “uncooperative” after they failed to reply to requests for a settlement.

Many of these “uncooperative” borrowers are at risk of having their assets, including their primary residence, seized by their lender even if they had filed for protection from creditors under the so-called Katseli law.

According to banks’ data regarding the implementation process of the Code of Ethics – which requires lenders to send two warning letters and then a third and final warning if the addressee fails to respond – the majority of the 300,000-odd borrowers deemed uncooperative have clocked up repayment delays of around a year.

Most of their debts are in unsecured loans such as consumer loans and credit cards. A good number of these borrowers do not have any property in their names and are therefore considered unable to repay their debts.

The next biggest category of uncooperative debtors, however, are individuals with mortgages who, though more exposed to the risk of having to forfeit their homes, have failed to comply with bank regulations. Banks argue that this is indicative of a lackadaisical mentality shaped by debtors being excessively protected and the ongoing resistance to seized property auctions from notaries and members of the public.

The smallest category among the 300,000 constitutes small businesses that tend to be more responsive to banks’ demands as they rely on continued credit.

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