Greek banks team up to offer settlements to 170,000 debtors

ATHENS – Buried under a mountain of bad loans consuming half their portfolios, Greek banks have banded together to offer debtors in 170,000 pending cases terms to settle, writing off a big portion of what they owe.

Crushed by big pay cuts, tax hikes, slashed pensions and worker firings, many Greeks are unable to pay their mortgages, credit cards and loans and the ruling Radical Left SYRIZA-led coalition, breaking promises, is letting banks foreclose on homes.

Still, the terms being offered by the union of banks could lead to main residences being protected from confiscations although it was unclear who would lose their homes and who wouldn’t as the government is letting banks go after the residences online to get around sometimes violent protests at open auctions in courts.

This is the first time that Greek lenders are joining forces to tackle the debts of those who have borrowed from more than one bank, and the settlements will preferably be extrajudicial, Kathimerini said.

The majority of cases that do reach the courts under the so-called Katseli’s Law to protect those who said they can’t pay are mortgages or consumer loans from more than one bank. The former ruling New Democracy and its partner, PASOK (now integrated into the Movement for Change) didn’t pay 250 million euros ($294.98 million) they owe, aren’t being pushed to do so and the bank officers who gave them the money with next to no collateral being put up were given immunity.

The new offers also were said to be a way to root out strategic defaulters hiding behind those who genuinely can’t pay.

“Those who genuinely want to have their debt settled have no reason to reject the common proposal that banks will extend to them,” an unidentified bank official told the paper, adding: “By contrast, those who don’t respond to the compromise offer by the banks will obviously have different motives.”

Bad loans totaling more than 107.5-million euros ($114.53 billion) are the biggest problem for Greek banks who are showing recovery, European Central Bank supervision chief Daniele Nouy told the Athens News Agency in March.

Greece’s four biggest banks estimate that 45 percent of the bad loans are in a grey zone even though people – apart from political parties not paying and businesses that took scores of billions in bad loans without collateral – are in a “grey zone” and likely won’t be paid back, the business newspaper Naftemporiki said then.