Banks agree to cooperate on debt settlement

Domestic banks intend to settle the almost 170,000 pending debt cases that have stalled in the country’s courts in a manner that is likely to lead to generous haircuts. They plan to do so by using judicial decisions already issued under the law that protects debtors’ main residences as a guide.

This is the first time that Greek lenders are joining forces to tackle the debts of those who have borrowed from more than one bank, and the settlements will preferably be extrajudicial.

The majority of cases that do reach the courts in the context of the protection law (known as the Katseli Law, after the economy minister who introduced it earlier this decade) concern mortgage or consumer loans from more than one bank.

The practice that banks have agreed to is aimed not only at accelerating cases and tackling the issue of nonperforming loans more efficiently, but also identifying strategic defaulters.

“Those who genuinely want to have their debt settled have no reason to reject the common proposal that banks will extend to them,” a bank official tells Kathimerini, while, “by contrast, those who don’t respond to the compromise offer by the banks will obviously have different motives.”