Banks join forces to settle bad loans

Banks join forces to settle bad loans

Banks are preparing to make joint proposals for the settlement of bad mortgages (with write-offs of up to 50 percent) and bad consumer loans (up to 90 percent) to almost 157,000 debtors who have filed for protection under the provisions of the so-called Katseli Law.

The lenders aim to offer more favorable terms via the extrajudicial settlement than those that could be secured in court, so that they can reach a speedier arrangement for the loans.

This is the first time that local banks are making such a move collectively, and in each case the initiative will be led by the bank where the borrower owes the most. For example, if someone has a small debt stemming from a credit card or consumer loan to Eurobank as well as having taken out a large mortgage with National Bank, the latter will initiate proceedings with the debtor and, if possible, negotiate a settlement on behalf of both banks.

The process will be launched immediately, with the banks making telephone calls to the debtors, and their intention to cooperate toward a definitive arrangement of their arrears will be gauged according to their response. Still, banks have low expectations, knowing that the immediate solution they will offer deprives borrowers of the grace period the law would grant them.

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