Expectations feed fresh bad loan creation
The change in government, largely expected since the elections were called at the end of December, along with anticipation of generous debt settlements and even write-offs were enough to lead many borrowers to forfeit their January repayments, leading to a fresh wave in the creation of bad loans.
While the creation of nonperforming loans had come close to zero by December 2014, after peaking in 2012 with up to 1 billion euros of new bad loans per month, bank officials say that in January 2015 there has been an upsurge of unpaid loans amounting to some 300-400 million euros.
A significant number of enterprises and households have apparently opted to postpone their payments, while banks have suspended the implementation of the Bank of Greece’s code of conduct and delayed sending letters to borrowers regarding their debts and the options at hand until February.
Despite the certainty that any fresh government intervention to ease the debt burden on borrowers will require significant additional funds – although where they might be found is anybody’s guess – borrowers are still hopeful and bad loans are growing anew.
