What the government is asking of Greek banks for loans and interest rates

The Minister of Finance will apply new pressures on banks – following a relevant order from Prime Minister Kyriakos Mitsotakis –  in order to pass on the benefit of the increase in interest rates to citizens and deposits. It is also expected to ask that special circumstances be taken into account due to inflation, especially in cases of vulnerable citizens and in debt.

In an upcoming meeting he is planning with the bankers, Finance Minister Christos Staikouras is expected to send the message that the banking system must first contribute to credit expansion. Also contribute to the rapid implementation of debt settlements, reform the pricing policy of loans, deposits and fees in a way that does not disproportionately burden businesses and households, and show sensitivity to vulnerable social groups.

Also read – Fin. Min. implores Greek banks to raise deposit rates

Out-of-court settlements

In terms of debts, the banking system has been asked to intensify efforts for the rapid implementation of debt settlements through the out-of-court mechanism, in order to be adequately shielded against the new risks that are lurking. As well as to reform the pricing policy of loans, deposits and commissions, in a way that does not disproportionately burden businesses and households.

Among the government’s arguments is liquidity, which according to data from the Bank of Greece, the balance of deposits reached 185.5 billion euros in September 2022, marking a new decade record high. In the nine months of 2022, Greek systemic banks recorded profits of 2.8 billion euros, surpassing the loss-making years of the past. The liquidity of credit institutions remained strong, at 50.7 billion euros in the nine months of 2022.