FinMin, bank reps conclude closely watched meeting; gov’t presses for relief from surging interest rates

A high-profile meeting between the Greek finance minister and representatives of the country’s systemic banks, aimed at relieving a rising burden on borrowers, concluded on Thursday evening, although few details emerged in its wake.

The meeting comes as repeated interest rate hikes by the ECB and an energy crisis-induced inflation have raised borrowing costs and the cost of servicing loans based on variable rates. Conversely, interest rates offered by Greek banks on deposits have move upwards at a glacial pace.
Although bank representatives made no statements after the meeting with FinMin Christos Staikouras, the country’s prime minister, Kyriakos Mitsotakis, hours earlier called on lenders to offer relief to borrowers paying off mortgages – an issue that has now taken on Europe-wide dimensions.

According to reports in the Greek capital this week, the government is proposing an initiative for eligible borrowers, possibly in the form of a subsidy for a greater portion, or the entire margin between previous and current interest rates tacked on over the past few months. For instance, one report being circulated is for an eligible borrower to receive a final interest rate of eurobor minus 0.1 percent.
Based on current rates, this formula translates into 1.8 percent, or in the worst-case scenario, 3 to 2.9 percent.