UPDATE 2-Greece wants to prevent new generation of bad debt after coronavirus
(Adds comments from Minister of Finance)
ATHENS, April 30 (Reuters) – Preventing an increase in bad bank loans is a top priority for Greece as it grapples with the economic fallout from the novel coronavirus pandemic, Prime Minister Kyriakos Mitsotakis told parliament on Thursday .
Greece pulled out of its third international bailout in 2018. A nationwide lockdown imposed to contain the spread of the virus has dashed expectations of strong growth as the government now forecasts a deep 5-10% recession this year.
“Successfully managing the health crisis will become the basis for an economic recovery,” Mitsotakis said.
The restrictions will be gradually relaxed over the next few months, starting May 4. Greece aims to cut red tape and speed up reforms to attract more investment and restart its economy as quickly as possible.
The conservative prime minister said the state will continue to support the unemployed and the working people. He also said that protection of primary residences against foreclosure would be extended for three months until the end of July 2020.
A new state-funded transition plan would go into effect in July to further support debtors.
“During the coronavirus ordeal, no Greek will see their home in danger,” Mitsotakis said. “Our goal is to prevent a new generation of bad debts.”
Greek bankers say the coronavirus pandemic has caused a market disruption, disrupting transactional activity across Europe, including sour loan assignments at home.
Athens implemented the Hellenic Asset Protection Scheme (HAPS), dubbed Hercules, to help banks get rid of up to € 30 billion in bad debt by turning bundles of bad loans into asset-backed securities that can be sold. sold to investors.
The chairman of Eurobank’s loan department FPS told a crowdcast this week that Greece’s foreclosure could lead to a 10-15% increase in bad loans, an increase of around $ 7 billion to $ 10 billion. euros compared to the current stock of 70 billion euros.
Finance Minister Christos Staikouras said later on Thursday that the Greek state would subsidize payments from borrowers to banks for primary residents for a specific period, without providing further details.
“We are reducing the risk of a new generation of bad debts,” Staikouras said at a press conference.
He said the total cost of the measures Greece has taken so far to support businesses and the labor market was around € 12.5 billion, or nearly 6% of the country’s GDP.
Including emergency funding for the European Union in the coming months, he said the figure would rise to 24 billion euros. (Written by George Georgiopoulos and Renee Maltezou; edited by Gareth Jones and Barbara Lewis)