Lenders to write off 14 bln eu­ros

Credit sec­tor plans to for­give ar­rears of house­holds and cor­po­ra­tions as it seeks to re­duce bad loans

Kathimerini English - - Focus - BY EVGENIA TZORTZI

Greek banks will write off debts of 3 bil­lion eu­ros from non­per­form­ing mort­gage, con­sumer and small cor­po­rate loans by the end of the year. By the end of 2019, the amount to be struck off is ex­pected to to­tal 14 bil­lion eu­ros.

Debt write-offs will con­sti­tute an im­por­tant in­stru­ment for clear­ing out the banks’ non­per- form­ing loan port­fo­lios, start­ing with old loans that not been ser­viced in more than two years. The “for­bid­den” dis­cus­sion about loan hair­cuts has been for­mally started by debt man­age­ment com­pa­nies, while for banks the sub­ject has been kept low-key, even in cases where they have writ­ten off debts.

That taboo will be sidestepped by com­pa­nies such as Cepal, as the joint ven­ture set up by Al­pha Bank and Spain’s Ak­tua will be the first to start clear­ing out bad loans. Cepal will ini­tially ad­min­is­ter a port­fo­lio of 1.5 bil­lion eu­ros, com­pris­ing 50-60 per­cent guar­an­teed loans while the rest will mainly be made up of con­sumer loans with­out col­lat­eral. Later on 2.5 bil­lion eu­ros will be added to the Cepal port­fo­lio and by the end of the year the joint ven­ture will em­ploy a to­tal of 200 peo­ple who will un­der­take com­mu­ni­ca­tion with clients to re­cover as much as pos­si­ble of the amount that cur­rently re­mains un­paid.

Banks are ex­pected to place em­pha­sis on long-term so­lu­tions through ar­range­ments that will not deal with the prob­lem for the first one or two years. Hav­ing the ex­pe­ri­ence of the eight-year-long cri­sis, which is get­ting deeper in­stead of end­ing, bankers are con­vinced that they should pro­ceed 1.0629 to so­lu­tions that deal with the prob­lem over a longer pe­riod, for all debtors and for all loan cat­e­gories.

Such an ap­proach would not ex­clude write-offs, even for loans that do have col­lat­eral. The amount to be struck off will be agreed from the out­set, but will only be im­ple­mented at the end of the con­tract and only af­ter the bor­rower has ful­filled their com­mit­ments to the bank.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.