BUSINESS

Banks offer borrowers haircuts of up to 90 pct

EVGENIA TZORTZI

TAGS: Banking

Greek lenders are proposing huge haircuts, ranging from 70 to 90 percent, for borrowers with debts from consumer loans, credit cards or small business loans without collateral.

In the context of the sale of a 2.5-billion-euro bad-loan portfolio named Venus, Alpha Bank is using the incentive of major haircuts in letters it has sent to some 156,000 debtors. The fact that this concerns some 240,000 bad loans means that some debtors may have two or three overdue loans.

Eurobank is employing the same strategy for a set of loans adding up to 350 million euros. Most of them range between 5,000 and 7,000 euros each and have been overdue for over a decade.

This means that the banks are expecting to collect a small amount of those debts, coming to 250 million euros for Alpha and 35 million for Eurobank – in effect accepting that the rest of the debt is uncollectible.

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