Banks ponder halving loan installments

Greek banks are examining the possibility of reducing the monthly tranches for loans whose repayment has been suspended due to the pandemic by 50%. This concerns loans worth 20 billion euros in total, which banks have frozen until the end of the year.

National Bank chief executive Pavlos Mylonas told a conference by The Economist on Tuesday that lenders intend “to assist those needing time to respond to their obligations in the way they did before the pandemic.”

He added that “the end of the payment suspension measure could lead borrowers to an impasse, when suddenly their monthly requirement will go from zero to its full amount, which for certain debtors could prove unbearable.” For that reason, “we are in talks with the monitoring authorities about the possibility for a gradual return to normal installment levels, just as we did in the case of applying the payment applications, by asking borrowers to pay 50% of their tranches in 2021, for example,” said Mylonas.

Such an initiative would help both enterprises and households, as well as banks themselves, which face the risk of a new generation of bad loans.