Economic paradox

Alpha Bank reserved an unpleasant surprise yesterday not only for its customers but for Greeks generally, though its unjustified decision to increase lending interest rates was greeted with enthusiasm by the rest of the sector. While keeping deposit interest rates down at very low levels, Alpha Bank raised mortgage interest rates by one percentage point, while also increasing personal and consumer loan interest rates by up to 2 percent. The real increase in housing loans, according to the Alpha Bank announcement, could reach up to 3 percent in cases in which the loan exceeds the property’s objective value, when the new higher interest rates would increase by a further 1 to 2 percent. «We wanted the euro and fiscal discipline. Well, sirs, this is discipline!» said a bank spokesman in announcing the new rates, adding, «Now we are a normal country as far as interest rates are concerned and we don’t like that.» We have serious reservations over whether these moves will help «restore normalcy» in the area of interest rates by bringing them in line with European standards. In fact, the announced move is an exception, as the other European markets expect the European Central Bank (ECB) to lower interest rates. As for the argument that mortgage loans were cheaper here than in the other European countries, this would hold true only if the increase in housing loan interest rates had been accompanied by a serious cut in personal and consumer loan interest rates in addition to a dramatic decline in the soaring credit card interest rates. But these were raised rather than lowered. Local banks are obviously making an attempt to shift onto their weaker customers the economic losses from hundreds of billions of unpaid loans that were granted to their large customers who gambled on the stock market, as well as from non-performing loans granted to big companies. In short, the banks’ aggressive behavior toward their customers, who are not to blame for their economic situation, illustrate the depth of the blanketed crisis in the banking sector and reflect the genuine shortcomings of the Greek economy as these effect the banking sector. One may understand the reasons behind the banks’ behavior but one can by no means agree with their socially provoking solutions.