E-auctions have not delivered results banks hoped for

Online auctions have failed to deliver the results that Greek banks had hoped for when the process started in December 2017, as on average only 40 percent end with some form of sale, while most properties return to the banks’ ownership.

Banks have engaged in an auction spree this year in an effort to recover some of the huge stocks of dues owed to them from nonperforming loans and to put more pressure on strategic defaulters to come to some form of arrangement for their arrears. The e-auction platform has already received orders for 35,000 property auctions and the numbers are growing by the day.

Although the launch of the platform 14 months ago came with expectations of a revival of property market buying interest, it is still a long way from becoming an efficient tool for house transfers. The main reasons are not just the poor buying interest in the market, but also the way the platform has been set up: It appears unable to attract the interest of potential buyers, as it offers only minimal information about the kind of property up for sale.

As a result banks are forced to continue their policy of buying back the assets they are trying to sell, with some 5,000 houses having returned to their books. Their planning provides for the acquisition of up to 20,000 properties over the next couple of years; however, this practice has come under the spotlight of European regulators that are pressing for the creation of efficient tools that would allow the credit system to gradually rid itself of those properties, either via isolated sales or the concession of property portfolios. In this sense new instruments are being developed, such as the online platform and the securitization of NPLs.

What is hampering the more active management of the properties in banks’ portfolios is the aggressive mood of various funds and the low market prices, which are forcing the lenders to keep those assets on their balance sheets to avoid taking losses from their sale. Bank officials explain that the prices these properties are auctioned at are the going rates and derive from assessments by chartered surveyors who operate independently and not on behalf of individual banks.