Foreclosures, which have been practically frozen for the last eight years, represent the credit system’s Achilles’ heel. The impact from the paralysis of the auction system is already obvious in banks’ financial results on the reduction of nonperforming loans and threatens to undermine the target set for containing nonperforming exposures (NPEs).
The European Central Bank’s Single Supervisory Mechanism (SSM) has asked Greek lenders to bring down their NPEs by 11.5 billion euros through liquidations (property auctions) up to 2019. Meeting this target requires foreclosures worth 5.5 billion euros per year while takings from auctions have been poor.
The foreclosures scheduled for this year only concern 5,600 properties, worth 1.1 billion euros. This is the smallest number of auctions in recent years, given that 2016 (when auctions were held for 4,800 properties) was practically wasted due to protracted strikes by Greece’s lawyers and notaries. This year’s figures actually concern mostly auctions demanded by the state or private lenders, while banks have only instigated few auctions, mainly concerning commercial or industrial properties.
For comparison purposes, one has to see the statistics from 2009, before Greece entered the bailout mechanism, when foreclosures numbered 52,000 and their value reached 4.2 billion euros. This means an 89 percent drop since then.