Greek banks are stepping up their effort to reduce their stock of nonperforming exposures (loans not serviced for at least 90 days and those unlikely to be repaid) at a time when local credit sector stocks have taken a battering.
In this context, the country’s four systemic lenders (Alpha, Eurobank, National and Piraeus), have proceeded to a joint effort to lure debtors away from the provisions of legislation that offers them protection for their main residence, while sales of bad-loan portfolios to funds continue.
After reaching their target for NPE reduction for the year at end-September, Greek banks have now pledged to their regulator, the European Central Bank’s Single Supervisory Mechanism (SSM), that they will achieve new, more challenging targets for slashing their exposures up until the end of 2021.
State broadcaster ERT reported this week that banks have started offering borrowers who have filed for protection of their assets under the so-called Katseli Law (after former economy minister Louka Katseli) a generous haircut on their mortgage or consumer loans.
The reduction of dues for those approximately 120,000 debts reaches up to 40-45 percent for housing loans and 80 percent for consumer loans, provided they are secured against the borrower’s main residence and that the debtor does not own any other major assets that could be liquidated.
“This is definitely a step in the right direction by banks, [which feel they are being forced] by the SSM so as to act on their bad-loan stock quickly and efficiently,” Giorgos Stratopoulos, an Athens-based analyst for think tank E-Kyklos, told Xinhua.