New ob­jec­tive val­ues would harm banks

Kathimerini English - - Focus - PROKOPIS HATZINIKOLAOU

Banks are prov­ing a ma­jor stum­bling block to at­tempts to ad­just prop­erty rates used for tax pur­poses (known as “ob­jec­tive val­ues”) as sim­ply lev­el­ing them with ac­tual mar­ket prices would likely harm lo­cal lenders’ cap­i­tal ad­e­quacy ra­tios.

A se­nior Fi­nance Min­istry of­fi­cial says that if the ex­ist­ing ob­jec­tive val­ues were re­duced to the level of the go­ing rates – at a time when the dif­fer­ence in cer­tain ar­eas amounts to 40 or 50 per­cent – the credit in­sti­tu­tions would suf­fer great losses from the drop in the value of the col­lat­eral for mort­gages.

Mort­gages cur­rently add up 64.8 bil­lion eu­ros. Of that amount, 42 per­cent qual­i­fies as bad loans, adding up to 27.2 bil­lion eu­ros, while the other 37.6 bil­lion is prop­erly ser­viced.

Tough chal­lenge

In any case the ad­just­ment of the ob­jec­tive val­ues re­mains a tough chal­lenge for the min­istry as the coun­try’s bailout com­mit­ments dic­tate that the new sys­tem for the cal­cu­la­tion of prop­erty val­ues will have to start op­er­at­ing on June 1, and un­der the ex­ist­ing con­di­tions it is im­pos­si­ble to form a sys­tem that will be ad­justed on a quar­terly or even bian­nual ba­sis.

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