The Greek banking system is very close to facing the negative consequences of the rapid credit expansion of the previous years. «We know that we may never get back some of our loans or some parts of loans,» a top banker told Kathimerini. The boom in credit of all sorts has accompanied lower interest rates over the past four years. Levels of indebtedness may not be as high as abroad but already several businesses are facing difficulties in repaying loan installments. It is not just businesses who are in difficulty. The Bank of Greece has focused its warnings about credit expansion mainly on consumer loans. Individual consumers have been on a buying spree for at least the past three years, helped by consumer loans and credit cards. This spending is one of the factors that has sustained high economic growth. But individuals’ defaults, when they come, may be more significant than those of enterprises. The Bank of Greece also worries about the banks’ ability to withstand defaults. This was the topic at yesterday’s meeting between new Bank of Greece Governor Nicholas Garganas and the Hellenic Banks’ Association (HBA). Garganas told HBA officials that he intended to strengthen the current regulations regarding banks’ provisions for bad loans. It emerged from the meeting that the commercial banks and the central bank have a slightly different view of the amounts required to cover future bad loans. According to experts, the total difference is rather small, about 300 million euros for all banks. Bank of Greece officials say that, for the time being, bad loans do not pose a great danger. They are more concerned, they claim, by the fact that, in the rush to attract business, banks have lowered their standards in screening for clients’ credit risk. Given the fact that defaults appear after a considerable delay, this could translate into liquidity problems somewhere down the road. The new regulations, to be included in a Governor’s Act, will change the way the risk of default is calculating, by taking into account a larger number of factors, including loan types. Garganas and the bankers also discussed recent judicial complications regarding the housing loan terms and extra charges on overdue loans. Garganas expressed his displeasure at the commercial banks’ lack of detailed information to prospective customers on the fine print of loan terms and asked them to implement recent court rulings regarding the terms of loans.