Fiance Minister’s new bout with Greek banks on interest rates

Finance Minister Christos Staikouras will have a new meeting with bank administrators today, one week after their last meeting, in which he asked them, among other things, to submit proposals for the relief of consistent borrowers who are affected by inflation and the rise in interest rates.

According to information, bankers contacted the minister yesterday, asking for more time, one week, to process the solutions they are preparing. However, the request was not accepted and the meeting was set for today at two in the afternoon.

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It is recalled that last Thursday’s appointment was characterized by tensions between the two sides, with Mr. Staikoura threatening to proceed with the imposition of an extraordinary tax on the sector if measures are not taken to protect households and businesses.

He also cited the high profitability that credit institutions are now showing, as can be seen from the nine-month results that were recently announced, according to which the net profits of the 4 systemic groups reached 2.50 billion euros.

The bankers responded that the profits recorded are not distributed to shareholders and that they are the fuel to finance the real economy and their transformation plan.

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They also noted that any decisions to support borrowers should be in line with EU law and supervisory rules.

However, Prime Minister Kyriakos Mitsotakis in the most categorical way assured the investors he met at the Morgan Stanley conference in London that there is no thought of imposing any levy.

Otherwise, the Finance Minister’s requests to the banks contained a little bit of everything and were as follows:

To raise deposit rates
To reduce the borrowing costs of their customers
To relieve the persistent and vulnerable borrowers with relief measures in the current juncture
To reduce supplies
To speed up loan arrangements through the out-of-court mechanism

The negotiation

Banking sources emphasize that in today’s new meeting with the minister, the issue of protecting borrowers will be re-examined.

The same circles report that the proposals to be discussed will concern the weakest households, which are consistent in repaying their installments.

The example of Spain, where a model of reducing installments and interest rates is adopted for households with incomes up to 29,000 euros, could form the basis for the design of the Greek measures.

In this case, however, the state does not contribute money and the costs are borne by the banks.

In his statements in the past few days, Mr. Staikouras, referring to the actions planned in Spain, emphasized that it does not seem to result from them any financial costs. He added that there is no room for support from the state budget.

In other words, this is a solution that, if implemented in our country, will burden the results of the banks, due to the inevitability of making increased provisions for credit risk, while it could even lead to an increase in non-performing exposures, if the interventions in the repayment terms exceed some limit.

In this context, it seems that the negotiation will move in the direction of cost sharing on both sides, state and banks.