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Greece’s systemic banks proposal on subsidizing low-income borrowers

Greece’s four systemic banks released a proposal to help vulnerable borrowers meet their monthly installments, outlining the plan and their contribution to the Greek economy in a joint statement on Thursday.

The move follows meetings with Finance Minister Christos Staikouras, who along with the PM, has pressured banks to assume part of the loan installment increases to low-income borrowers.

The banks joint statement follows up on a meeting with Staikouras on who described it as “tense.”

Alpha Bank, Eurobank, National Bank, and Piraeus Bank said they would support 50% of the increase in a loan installment, based on the increase calculated as of June 30, 2022.

The borrower qualification requirements they proposed included the following:

– Borrowers with a housing loan or a small-business loan, using as collateral security their primary residence.

– Income as set out in Law 4472/2017 for inclusion under “vulnerable”; that is annual income of up to 7,000 euros, increased by 3,500 euros per family member (maximum annual family income 21,000 euros); maximum value of primary residence up to 180,000 euros (based on official objective property tax valus or ENFIA); and total deposits of up to 7,000 euros, increased by 3,500 euros per family member (maximum family total of deposits 21,000 euros).

– Qualifying debts: All current debts, with a delay of repayment of no more than 90 days, based on the date of the borrower’s application. Debts incurred from new loans issued past December 15, 2022 (today) will not qualify.

– Amount of subsidy: 50% of the interest-rate increase (based on June 30, 2022 figures); subsidy to be cancelled if the borrower defaults in an instalment for over 30 days.

– Subsidy method: Creation of a fund of corporate social responsibility, with equal contributions by each of the four systemic banks, which will be managed by the Special Secretariat to manage private debt (EGDIX) through the ‘Gefyra’ platform, where a potential beneficiary will apply.

– Length of subsidy: 12 months.

– The application deadline will be set and announced.

So far, there has been no banks announcement on raising interest rates for deposits, another issue for which the FinMin and the PM have requested.

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One comment

  1. it must remain absolutely clear that this is not the taxpayers subsidizing the borrowers.. this is one more example of the taxpayers subsidizing the BANKS!
    the bank took an informed risk lending money (not even to mention that it was imaginary fractional-reserve funny money just magically created on their books and not anything they worked for) against those properties.. and those properties now are worth far less than they were some years ago.. and they also did their due diligence in making sure they werent lending millions to someone who had no possibility of paying it back, right? well, when the borrowers are honestly bankrupt.. the bank should eat the loss, yes, take the house, but then thats the end of the matter- no going after the broke borrower for the rest of the underwater loan, and no getting endless subsidies so that no matter what happens they always win. that’s garbage!