80% of “frozen” loans are suspended

75% -80% of the serviced loans of companies and households that joined the bank facilitation programs after the outbreak of the pandemic remain in the status of suspension of payments or amortizations. Borrowers thus exercise the right to remain in the favorable regime until the end of the year. According to banking sources, this is a high but expected rate, given the difficulties faced by the recession of tens of thousands of debtors. It shows the need for a gradual return to the pre-coronary installments from 2021. Means of defense On the contrary, from 20% -25% of borrowers who returned to normal payments, 60% interrupted the grace period at their own request and began repaying it. debt. These are basically households whose financial situation allows the smooth servicing of debts, but also for companies with good fundamentals, which used the suspensions as a means of defense after the imposition of the lockdown. But now they do not need them. The black box But there is a 40% of the loans that were not extended until the end of the year, which is a black box for banks. This is because the suspension was not initiated by the debtors, but because it was not possible to communicate with them. Therefore, it will be largely clear in October whether they will continue to service their loan or not. In this case, however, if the debtors are asked to extend the suspension until the end of December, the request will be accepted. According to official data from the Bank of Greece, most of the suspended loans of 19.9 billion euros in At the end of the summer, it joined the programs of temporary suspension of payments of installments or installments in the quarter April – June. In May they amounted to 14.90 billion euros, in June they increased by 3.15 billion euros, in July by 1.72 billion euros, while in August they recorded a very small increase (129 million euros). Loans From their high, the relative amounts in housing have decreased by 346 million euros (data August ’20), while a similar decrease is recorded in professional loans (approximately -3%). On the other hand, the corresponding figures in business credit have been moving upwards in all the previous months. According to a banking source, good companies may have stopped the moratorium in a short period of time, but at the same time new requests are being submitted by others who either overestimated their potential. or their expectations for the course of their sales in the summer were dashed. Thus, the loans of the category at the end of August had reached 8.3 billion euros, increased by about 4 billion euros compared to last May. New regulations are coming. Banks and companies with bad debts are planning at this stage next year. day after the end of the suspensions. According to information, there is support available to debtors with financial problems due to the pandemic. For this reason, the gradual return of doses to pre-pandemic levels is being considered. For example, borrowers who are proven unable to service their debt will be able to pay reduced installments of up to 60% or only interest for a period of 3-12 months, depending on their needs. In this way, the necessary time will be given for the recovery of their income. Alternatively, support is offered to those who repay a mortgage loan to their main residence and who have been affected by the crisis, through the nine-month state subsidy program of installments at 60% – 76% average. Applications for the “Bridge” action continue until the end of November, after a one-month extension. Presentations of the red loan plan The Bank of Greece started last week the presentations of its red loan plan to the Ministry of Finance and banking administrations. The governor of the domestic monetary authority, Giannis Stournaras, estimates that the consolidation scheme (bad bank) he proposes could clean up in a short period of time, even in 2021, the balance sheets of the banks from the red loans. In addition, with the proposed tool, the problem of high deferred taxation in their supervisory funds is being solved. Awaiting SSM for CoCosThe establishment of the ECB’s supervisory arm (SSM) is expected by the management of Piraeus Bank to repay the interest for the convertible bond (CoCos) of 2 billion euros issued in the context of its recent recapitalization. The CEO of the group, Christos Megalos, has given clear instructions to the competent directorates so that everything is ready by December for the payment of the coupon. However, given the difficult situation for the industry across Europe, it is possible that the SSM will urge banks to play defense and not pay cash obligations at this stage, provided of course there is an alternative. In the case of the Piraeus group, the interest could be paid under Tier 2 securities. It is recalled that the CoCos were issued in 2015 by the bank with an 8% coupon. That is, every December the annual interest amounts to 160 million euros. It is noted that the bank has already exercised its right not to pay the coupon once. So from now on payments must be made normally either in cash or in other securities. Otherwise the bond is converted into shares that are returned in the Greek State with a conversion price of 6 euros per share. According to information, however, in no case does the administration of Megalo want such a development. The question of course remains about what will happen with the repayment of 2 billion euros at the end of the title. But this is something that will be judged in about two years from today.

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