Banks have strong indications that the number of borrowers who do not meet their obligations despite being able to – known as strategic defaulters – is considerably higher than originally thought, with online auctions helping to identify many more.
Internal checks by the country’s lenders point to a rate of almost 30 percent of borrowers with nonperforming exposures being likely strategic defaulters, against a hitherto estimated rate of 20 percent. This means that of the 77.5 billion euros of corporate, mortgage and consumer loans that are nonperforming, more than 20 billion concerns cases of borrowers who could have serviced their debts.
In fact banks estimate that some 35 percent of bad corporate loans concern strategic defaulters, while the rate among individuals comes close to 25 percent.
Bank officials tell Kathimerini that in recent years the idea that it was somehow smart not to meet one’s obligations had been systematically cultivated, and today 75 percent of citizens do not pay their dues to banks, utilities and others, as to date there have been practically no consequences.
That appears to be changing now with the start of electronic property auctions; according to credit sector officials, many borrowers who until recently would ignore lenders’ requests that they settle their arrears – or reject all proposals to that end – are now the ones who are rushing to banks seeking a solution.
For instance, a freelance professional had debts of about 550,000 euros in the form of a mortgage loan and 18,000 on a consumer loan to a systemic bank secured by a three-floor property in Attica with a market value of 350,000 euros. For years, she had failed to respond to the bank’s attempts to contact her, but as soon as she found out her property was to be put up for auction, she contacted the lender asking for an appointment the very next day and produced a full file of her financial data, accepting a settlement proposal.
Such cases are increasing daily, as defaulters appeared to think that e-auctions would not take place. Bank sources even say criminal elements have penetrated the anti-auction activists, instigated by major debtors.