Loans on ice total €30 billion
Loans whose repayments have been frozen due to the pandemic add up to 30 billion euros, concerning some 400,000 individual and corporate borrowers, according to the Hellenic Bank Association. The moratorium on tranche payments expires on March 31.
All banks, as well as the companies managing loans for them, have created special programs for the gradual restoration of tranche payments. Their aim is to prevent those loans from turning into nonperforming exposures; that would force banks to take increased provisions to cover them and would constitute a serious threat to their capital in the middle of a securitization procedure that has already started affecting their financial balance.
For example, National Bank will offer the “Ethnogefyra” program that will reduce the tranche due by up to 50% throughout 2021 for clients who prove they are unable to pay their original installment toward their debts. Alpha Bank is implementing so-called “step-up” programs that provide for personalized arrangements regarding the level of the installment for a number of months provided the customer has started repaying their dues, while Eurobank is also set to make a gradual return to the pre-crisis levels of tranches, initially expecting half of each monthly tranche for now.
The Piraeus Bank program for borrowers whose repayments have been frozen due to Covid-19 provides for reduced tranche payments for the next 18 months, the lender announced on Monday.
It added that the restoration of loans on which payments have been halted into performing ones will be conducted through a program of reduced payments that will be gradually increased, while borrowers will be included in the program online with the use of electronic signatures.
Borrowers whose payments have been suspended will after the moratorium be able to pay part of their tranches for the next year-and-a-half – i.e. 50% of it for the entire 2021 and 75% for the first half of 2022. This way they will revert to paying 100% from the second half of 2022, with the length of their loan extended accordingly.