Gov’t tables reform for tackling bad loans
Outgoing Development Minister Nikos Dendias submitted to Parliament yesterday a plan for dealing with billions of euros in nonperforming loans (NPLs) held by Greek businesses, a long-awaited reform which still requires the approval of the troika.
Dendias, who assumed the post of defense minister later in the day, said the government is also working on a scheme for unpaid mortgages, another major burden on banks and an intense social problem.
The plan for the companies foresees the writing down of up to 50 percent of debts owed, with a ceiling of 500,000 euros in place for each lender they do business with.
The reform is aimed at lightening the burden on tens of thousands of debtors that have an annual turnover of up to 2.5 million euros and employ more than 700,000 people in total. Dendias said the problem was serious enough to warrant a political consensus that stretched beyond the government.
As regards the forthcoming mortgage reform, the government’s plan is based on banks reducing the recorded value of the property against which the mortgage has been taken by 30 percent. The loan will then be split in two: one part, amounting to 70 percent, will be repaid normally, while there will be a 15-year moratorium on the remaining 30 percent. The value of the property will be reassessed when the second part of the mortgage becomes due.
The hope, Dendias said, is that the property market will recover from a steep drop in prices in recent years.
Prominent leftist SYRIZA MP Zoe Constantopoulou rejected the proposed reforms as a “badly staged public relations exercise” by the government, describing as an unprecedented violation of parliamentary rules the fact that the minister who submitted the bill will not be the one who subsequently defends it in the House.
As regards the position of the troika on the proposed plan for corporate NPLs, Dendias said the two sides have already reached a verbal agreement on the matter but conceded that auditors still had some reservations as regards the number of instalments in which debtors should be allowed to honor their dues. He said the issue would be settled in the coming days. Costas Skrekas, who was sworn in yesterday as development minister, will continue talks with the troika on NPLs.