Chance for borrowers to match fund bids as tested in Cyprus

Borrowers should have the first option to buy back their loan at the same price as that for which their creditor would sell it to a fund, according to a joint proposal tabled yesterday by the plenary of Greek bar association presidents, the Economic Chamber of Greece (OEE) and the Technical Chamber of Greece (TEE).

The proposal, which has the markings of a debt settlement, was presented at a press conference yesterday and has already been implemented in Cyprus. It has also been discussed with bankers, who have not raised any objections.

The idea tabled provides for the credit institutions to inform a borrower that their loan will be made part of a portfolio of loans for sale, granting them 45 days to come to the bank and reach a settlement agreement. If they do not turn up, the bank will include the loan in a portfolio to be sold. Participants in the sale will be aware that one last chance will be given to the borrowers at the same price that the preferred bidder offers.

Then a letter will be sent to the borrower informing them of the price offered and asking them to match it. If they do, they will also have to explain the origin of the money required and offer a timetable for the loan’s payment.