Early next week the government will send the country’s creditors the final text of the amendment to the Katseli law, as up until Friday certain disagreements remained among the competent government officials on how to respond to reservations expressed by the creditors.
There were repeated government meetings on Thursday and Friday, as well as conference calls with the creditors, who demanded some technical clarifications and adjustments. One of the points the creditors are focused on is when the platform for the submission of applications by debtors will be ready and what will happen until it become operative.
They also share the banks’ concerns over what is in their view the expanded protection limits – i.e. the value of the primary residence and the income criteria. There also are reservations about the horizontal and automatic settlements (interest rate reduction, loan extension and haircut) without the banks having any say on them.
For the bill to be voted by the end of February, there should be an agreement by all parties by the end of next week, so that the bill ban be tabled in Parliament then.
Meanwhile the Bank of Greece and market officials alike have warned the government against complacency on the bad loans front and the credit sector in general in an election year, stressing the need for immediate measures to restore system stability and investor confidence, such as the issuance of a 10-year bond.
Addressing an IMN annual investors’ conference on nonperforming loans in Greece and Cyprus, BoG Deputy Governor John Mourmouras said that while “the time has come to resolve the NPLs problem… there should be no complacency or slackness of effort on the part of the national authorities, especially this year, a multiple-election year in Greece. The government must commit to reforms, not like in the past.”
He added that “it is only a matter of time for a new 10-year government bond issue, which is of highest importance also for the pricing of future NPL securitization products.”
Former finance minister Petros Doukas told the same conference that “sooner or later Greek banks will need a recapitalization,” noting that “any new recapitalization will entail dilution.”