Katseli law and protection plan cause concern

Katseli law and protection plan cause concern

The government is facing a difficult task in trying to overcome the resistance of banks on two key issues that would accelerate the reduction of nonperforming loans, which currently stand at some 80 billion euros.

The first issue concerns the protection of debtors’ main residence by the so-called Katseli law. The government is attempting to dissociate the property protection from the court process and tackle it in an out-of-court procedure, through the platform to be created at the Special Secretariat for Private Debt.

The second concerns the Asset Protection Scheme that the Economy Ministry is promoting as an additional instrument to assist banks in their effort to bring down their bad loan stock at a faster pace through transferring part of it to the scheme that will be set up.

In the case of the law named after former economy minister Louka Katseli, banks are eager to reduce the losses they will record in their books due to the additional provisions they will need to take, damaging their capital.

Concerning the Asset Protection Scheme, the banks are setting a red line over the commission the lenders will have to pay to the state in order to receive the state guarantee without that being considered a state subsidy. This parameter will also determine whether the plan receives the approval of the European Commission.

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