ECONOMY

Smaller loan installments for hardest hit

smaller-loan-installments-for-hardest-hit

As of January, Greek banks will implement reduced installment programs for well-serviced loans of those affected by the pandemic – businesses and households – that had been frozen since last April. 

The announcement came on Tuesday as the nine-month banking “moratoriums” gradually begin to expire at the end of December.

In a bid to mitigate the serious side effects on economic activity resulting from the pandemic and to prevent these loans from turning into nonperforming ones (NPLs), banks plan to restore installments to pre-crisis levels over a period of one or two years. 

Kathimerini understands that the National Bank of Greece (NBG) will offer a program, which provides for a reduced instalment of 50% for the whole of 2021.

Alpha Bank is aiming to reduce installments, depending on the capabilities of the debtor in question, for a period of two years. 

Eurobank is also preparing a gradual return of installments to pre-crisis levels for 2021, increasing installments every quarter, while Piraeus Bank will implement programs depending on the financial situation of the debtor. 

In total, these interventions concern 400,000 loans, totaling 25 billion euros.

Greece is among the top five countries that have given borrowers the largest moratoriums, according to the European Banking Authority, as the suspensions granted by the four systemic banks reach 15% of their total loans. 

The strategy pursued by Greece’s four banks in managing these loans is not uniform, as they have established cooperation with different companies for this purpose.

Piraeus Bank has assigned the management to Intrum, Eurobank to doValue and Alpha Bank to Cepal, while NBG manages the NPLs of its customers internally.

The moratoriums had been given to consistent debtors – i.e. to those who had been servicing their loans normally until February 2020. Households were given a moratorium on their mortgage and consumer loan installments, while companies were only given an exemption from the obligation to pay interest.

The new measures will mainly concern this category of customers. 

This, however, does not mean that those with pre-existing NPLs cannot settle them. However, the handling of this category of loans is not always a matter for the banks, since a significant chunk of them have been sold to funds.