The Hellenic Bank Association (EET) on Tuesday said an out-of-court settlement framework should be limited to businesses entities that owe a minimum of 50,000 euros in arrears, whereas a “suspension clause” -- from the period from when a debt relief petition is filed until it is adjudicated -- should also be abolished.
The association, which represents Greek banks, warned that suspending legal and administrative actions when a petition for an out-of-court settlement is filed will only encourage so-called “strategic defaulters” to take advantage of the measure.
EET’s positions were presented in relation to a relevant draft law in Parliament establishing the arbitration framework for business and corporate arrears, especially ones owed to banks. The out-of-court settlement framework is a memorandum-mandated action.
Speaking on Tuesday before a relevant Parliament sub-committee where the draft legislation is being debated, EET president Nikos Karamouzis said Greece’s systemic banks have promised EU bank regulatory authorities that non-performing loans (NPLs) booked to businesses and private citizens in the country will be reduced by 40 billion euros by the end of 2019 – or 38 percent of “bad debt” total, in current value.
“This is a difficult target; it is a target, however, that under certain conditions can be achieved, especially if economic conditions and the country’s growth prospects improve,” he noted.
Karamouzis said under the very narrow definition of NPLs, the figure reached 74 billion euros by the end of 2016, but roughly 100 billion euros under a broader definition, “a record for Greece and Europe,” as he said.
During his testimony, Karamouzis also called for arrears to deal only with business-related debts, and not personal debts or mortgages.
“There are many bank products, on a bilateral basis, for personal debts. The law’s emphasis should be on safeguarding entrepreneurship,” he explained.
At the same time, he repeated that if the minimum remains at 20,000 euros, instead of 50,000, “then thousands of debts will head to the banks … I am concerned that we will not be able to manage so many petitions”.
In a later reaction on Tuesday evening, Economy Minister Dimitri Papadimitriou rejected the 50,000-euro threshold requested by the association, while promising that a relevant internet platform will be ready in three months.
