Bank bait attracts watchdog
Increased competition in the Greek banking market has some of the players in the sector resorting to questionable marketing tactics, raising concerns at the country’s bank regulator, sources said yesterday. Bank of Greece sources told Kathimerini that the regulator is keeping a close eye on advertisements that have been flooding the market recently by lenders pushing their mortgages and loans. Increased competition and strong domestic credit growth has banks fighting it out for a part of a growing industry. In a bid to increase market share, many banks are not charging for different home loan expenses, such as legal fees. Sources said that some of the marketing campaigns set out to confuse potential customers by giving the impression that a particular bank will settle for a smaller monthly payment. The fine print, however, reveals that the attractive lower monthly installment applies only for an initial period and that the customer’s obligations then increase. Sources said that there are also concerns as to whether banks have properly informed their customers about the impact of a possible interest rate hike. The growing possibility of a rate hike in 2005 increases the risks for mortgage holders who have obtained a loan with a floating interest rate to come under a heavier financial burden. Credit growth in Greece has been strong in the last few years as residents are still coming to terms with a low interest rate landscape after the country’s entry into the eurozone in 2001. In a move aimed at protecting borrowers, the Bank of Greece recently required banks to issue loans that do not demand more than 30 to 40 percent of their customers’ monthly incomes.
