Loans: The emergency plan from the banks

Ready to extend the installment suspension already offered to informed borrowers affected by the coronavirus crisis and to provide facilities to customers who continue to service their debts to date, but may face difficulties in the near future due to the recession, are As the unfavorable scenario for the economy seems to be confirmed, after the outbreak of the coronavirus and the imposition of new strict measures to restrict economic activity, the banking administrations will try with easy payment methods to keep as many loans alive as possible. provided for the suspension of installments and the payment of interest only for households and businesses respectively until the end of the year. But until the end of the health crisis is visible, it becomes clear that it is necessary to continue the facilities for a longer period of time. Bank executives have already spoken of a gradual return of installments to pre-COVID-19 levels from 2021. The action plan Today loans over 20 billion euros are in the status of installment suspension or amortization. This is about 20% of the green loans until last March that have been frozen in one way or another. According to a banking source, it is not ruled out that in the coming months there will be an increase in the relevant amounts, as there will be pressure on income. states that if the forecast for a recession of up to 4% next year is verified, it is more likely that the moratoriums in force will continue for a longer period than expected. In this context, banks and associates in the management of non-performing exposures servicers have drawn up a targeted intervention plan in the coming months which includes the following: 1. Retention of reduced installments: Loans that are already in the facility status, with an expiration date next New Year, will be given the opportunity to continue the suspension of installments or amortizations on the same terms for a few more months. Doses will be returned to pre-coronavirus levels, if necessary gradually, by increasing them e.g. per quarter. In any case, these facilities will be given in a targeted manner, ie to borrowers who are proven unable to service their debt.2. Inclusion of new loans in suspensions: Banks take it for granted that some of the € 80 billion in outstanding loans that continue to be paid normally will need to be suspended in the coming months. Therefore, they are ready to consider any relevant request. In general, households have the option of non-payment for a few months up to 100% of their installment and businesses can only pay interest.3. Deep Adjustments Where Needed: When borrowing cuts due to financial turmoil are not temporary and are not expected to return to pre-crisis levels soon, banks are prepared to offer a change in loan repayment terms, basically by extending repayment terms. . As such restructuring has a cost, as it makes it necessary to make additional provisions, they will be implemented after a thorough examination of each case.4. Suspension of first home auctions: For vulnerable households that consent to the lifting of their banking secrecy, banks will not proceed with first home auctions until at least the end of the year. In this way there is protection for the homes of the really weak borrowers, until the activation of the new bankruptcy code. High demand for the 9-month subsidy Last Saturday, the applications for the state subsidy program of red and green, mortgages, connected with the first home of the debtor, loans. In total, more than 160,000 debtors showed interest. After the completion of the control of the eligibility of the submitted applications, which is already in progress, we will move on to the phase of payment of the state subsidy. Payments will start: -From the current month, for a serviced loan that has not been included in the installment payment suspension.-After the end of the installment payment suspension, after consultation of the borrower with the credit institution, for a serviced loan that has been included in the context of suspension of payment.-After the borrower agrees with the bank for a new, sustainable settlement of his debt, for non-performing loan.In any case, the above actions must be completed in time for the state subsidy to start It is recalled that the nine-month state subsidy of consistent borrowers averages 80% for green loans (monthly ceiling 600 euros), 70% for red but non-terminated loans (monthly ceiling 500 euros) and at about 47% for non-performing exposures (monthly ceiling 300 euros). Borrowers will have to pay the remaining amount each month. of the installment not covered by the state. After the end of the grant, they must pay the full monthly installment of the loan for a period of at least 6 months in the case of non-performing loans, 12 months for non-performing loans that have not been terminated and 18 months for the terminated loans. Otherwise the subsidy will be requested back. Problem with the new requests for suspensions The banks are exposed after the announcements of the Minister of Finance Christos Staikouras that the informed borrowers affected by the coronavirus can submit from now on the request for suspension of payments December. According to a banking source, the relaxation of the supervisory rules by the European Banking Authority (EBA) is currently provided only for facility requests submitted by 30 September. So if the directive is not changed, banks will have to make forecasts for each new suspension. According to information, the issue will be immediately resolved by the Hellenic Banking Association to the supervisor. Concerns about out-of-court settlement The banking administrations are concerned about out-of-court settlement, which will be activated next New Year. It is a tool that will work in parallel with the new bankruptcy framework and will allow borrowers who are facing financial difficulties and have overdue debts to either the State or the banks to achieve a sustainable settlement. Banks are worried about a massive influx of out-of-court applications even from knowledgeable borrowers, who have seen their incomes plummet due to the pandemic or who owe government debt and want to settle it. Banks, according to the legislation, are not obliged to submit a settlement proposal at the request of the borrower and if two months have elapsed the whole procedure is considered invalid. They can then either negotiate with him or proceed with enforcement measures. use the out-of-court mechanism for this purpose. In addition, the same circles claim that according to the current supervisory rules from the moment of submitting the application if it is a green loan, it is automatically categorized as “uncertain to be collected” and the bank must make forecasts. According to banking circles, at present There are only verbal assurances from the government and the Bank of Greece. As they point out, if the regulations do not change the applications in the first months of 2020 could create a hole of 1.50-2 billion euros that will have to be filled with new forecasts. Follow it on Google News and be the first to know all the newsSee all the latest News from Greece and the World, at

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