Proposal of systemic banks of Greece to subsidize low-income borrowers

Greece’s four systemically important banks released a proposal to help vulnerable borrowers meet their monthly payments, laying out the plan and their contribution to the Greek economy in a joint statement on Thursday.

The move follows a meeting with Finance Minister Christos Staikouras, who, along with the prime minister, pressured banks to take on part of the increase in loan payments for low-income borrowers. Staikouras described the meeting as “tense”.

Alpha Bank, Eurobank, National Bank and Piraeus Bank stated that they would support a 50% increase in the loan installment, based on the calculated as of June 30, 2022. Their proposed qualification requirements for borrowers are as follows:

Borrowers with a home or small business loan using their primary home as collateral. Income in accordance with Law 4472/2017 for inclusion in the “vulnerable” category, i.e. annual income up to 7,000 euros, increased by 3,500 euros for each family member (maximum annual family income of 21,000 euros); the maximum value of the main residence up to 180,000 euros (based on the official objective real estate tax valus or ENFIA); total deposits up to 7,000 euros, increased by 3,500 euros for each family member (maximum total family contributions 21,000 euros). Qualifying Debts: All current debts that are less than 90 days past due, based on the borrower’s application date. Debts incurred on new loans issued after December 15, 2022 (today) will not qualify. Subsidy amount: 50% of the interest rate increase (based on data as of June 30, 2022); the subsidy is canceled if the borrower does not repay the loan for more than 30 days. Subsidy method: Establishment of a corporate social responsibility fund with equal contributions from each of the four systemic banks, which will be managed by a dedicated private debt management secretariat (EGDIX) through the Gefyra platform, where the potential beneficiary will apply. The duration of the grant is 12 months. An application deadline will be set and announced. Still did not have bank announcements to raise interest rates on deposits, another issue raised by the Treasury and the Prime Minister.