PM hints at his dismay with banks

Prime Minister Kyriakos Mitsotakis indirectly but clearly expressed his unmistakable perturbance over the attitude of banks regarding the government’s push to support borrowers during his meeting on Friday with President Katerina Sakellaropoulou.

Mitsotakis stressed that this support is needed and that banks must do their bit.

“[The banks] must assume their responsibility – that is, they must support vulnerable households – as they are highly profitable, so that we can prevent the creation of a new generation of red loans,” he stressed. 

This, he said, would also benefit the banks themselves, in addition to the mandatory support they have to offer to households that are being tested by the increase in mortgage installments.

What’s more, he said that lending rates should fall and deposit rates should rise accordingly.

To this end, the government has recently been exerting constant pressure on the banks as evidenced by the ongoing discussions Finance Minister Christos Stakouras has had with representatives of the financial industry to reach an understanding on the interventions that the banking system must make to support households and businesses.

It was, of course, made clear a few days ago by the prime minister during his speech at the Morgan Stanley conference in London that no extraordinary tax would be imposed on banks, sending a reassuring message to bankers.

At the same time however, this does not mean that there is no chance of him changing his stance if this situation continues and starts to become a political problem.

The government has asked banks, among other things, to: a) support vulnerable borrowers, b) increase approvals of out-of-court mechanism applications, c) reduce lending rates, d) put a brake on the cost of commissions of simple banking transactions, while it has legislated that there will be no bonuses for senior bank executives for 2022.