Banks un­happy with bad loans bill

Kathimerini English - - Focus - BY EV­GE­NIA TZORTZI

Bank of­fi­cials are ex­press­ing se­ri­ous reser­va­tions about the ef­fi­ciency of the gov­ern­ment’s bill re­gard­ing non­per­form­ing cor­po­rate loans, ar­gu­ing that the tar­get set by the De­vel­op­ment Min­istry for the adop­tion of the pay­ment plans by 160,000 en­ter­prises can­not be met.

The main ob­jec­tion ex­pressed con­cerns the ex­clu­sion from the draft law’s fi­nal text of the in­cen­tive that would re­duce the in­ter­est rate, as well as that cut­ting fines and penal­ties on debts to the tax au­thor­i­ties and the so­cial se­cu­rity funds.

Th­ese ob­jec­tions will be dis­cussed at the next meet­ing of the Hel­lenic Bank As­so­ci­a­tion when it is ex­pected to de­cide on the fi­nal pro­pos­als to be sub­mit­ted in the form of ob­ser­va­tions to the De­vel­op­ment Min­istry. The banks’ think­ing is that, ac­cord­ing to the in­for­ma­tion cur­rently avail­able, the bill does not cre­ate a fa­vor­able frame­work that would of­fer in­cen­tives to debtors.

The fi­nal text con­tains no ref­er­ence to the in­cen­tive for the in­ter­est rate sub­sidy, which would pro­vide for the set­tle­ment of debts to banks in 100 or 120 in­stall­ments – i.e. in up to a decade, im­prov­ing the chances of the smooth re­pay­ment of debts. The text has also brought down the dis­count on the penal­ties for debts to the tax au­thor­i­ties and the so­cial se­cu­rity funds from the orig­i­nal 100 per­cent to just 20 per­cent.

The bill has left ne­go­ti­a­tions be­tween debtors and banks to the banks’ dis­cre­tion. Although the full lib­erty granted to cred­i­tors is in­ter­preted as strength­en­ing their ne­go­ti­at­ing po­si­tion, banks be­lieve that this will not help with the han­dling of the prob­lem of bad loans, as that would re­quire a gen­eral tack­ling of the is­sue through in­cen­tives and pro­ce­dures that would lead to a gen­er­ous set­tle­ment of debts.

In this way the bill will shift all the re­spon­si­bil­ity to the banks, which with­out be­ing armed in any way to tackle bad loans will need to draft a sus­tain­abil­ity re­port for each en­ter­prise.

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