And the regular banks said we have approached the dialogue with the Ministry of Finance in a constructive spirit.
The positions that were presented during the institutional dialogue with the Ministry of Finance were presented by the four regular banks, indicating that each of them put their own plan on the dialogue table, based on their specificities.
As he highlighted, “the four systemic banks are engaged with a constructive spirit in the institutional dialogue with the Ministry of Finance.” In this context, and during a meeting yesterday (12/14) of their departments with the Minister of Finance, Mr. Christos Staikouras, each bank presented, based on its own approach, statements, positions, and proposals, a series of issues related to Finance. Operation of the financial system, and its response to the need to finance a growing economy and support families and businesses in the current situation.
Conditions that establish the bank’s announcement, there is data on the borrowers who will benefit from the subsidy program.
A support plan for vulnerable borrowers within the social responsibility programs of each banking institution
Beneficiaries: Borrowers who have obtained a home loan or a commercial loan, with a guarantee on the first residence.
The entry criteria, defined by Law No. 4472/2017 for inclusion in case of weakness, are:
- An annual income of up to €7,000, up to €3,500, for each family member, with a maximum annual income of up to €21,000
- The maximum value of the (first) main residence is €180,000 (based on the value of the ENFIA account), and
Total deposits are up to €7,000, up to €3,500 for each family member with a total deposit limit of up to €21,000.
Subordinated debts: Existing reported debts, that is, loans past due up to 90 days, with reference (to report or not) to the date on which the request was made by the creditor. Debts arising from new loans granted after today’s date are not eligible.
Subsidy rate: 50% of the increase in the interest rate (with the increase date calculated on 6.30.2022). The subsidy is suspended if the debtor is late in paying his installments for a period of more than 30 days.
Support scheme: the creation of a CSR fund, with equal contributions from the four systemic banks, which will be managed by a third party (EGDIX) through the GEFYRA platform, to which the beneficiary’s request will also be submitted.
Scholarship duration: 12 months.
The deadline for submission of applications will be determined and announced.
four plans
Each of the four systemic banks, depending on its own characteristics:
In particular, he presented the results of his credit policy and its contribution to the strong growth rates registered by the Greek economy this year.
The expansion of Greece’s net credit to companies during the first 10 months of 2022 was 4.5 billion euros (10.8% year-on-year) and is expected to be close to or even exceed 7 billion euros by the end of the year.
In addition, in the context of the Recovery and Resilience Fund (RDF), the banks have evaluated and carried out on behalf of their clients the total investment of some 10,000 million euros, of which up to 40% will be financed by credit institutions.
These investments cover almost all sectors of the Greek economy and are expected to create tens of thousands of jobs in the coming years.
The banking system also plays an active role in attracting foreign direct investment to Greece, which in 2021 reached 5.5 billion euros (3% of GDP), a record high that is expected to be exceeded this year.
The CSR plan has been submitted to the Minister of Finance to subsidize loan installments that vulnerable households have received in the past, in order to reduce the burden of servicing their credit obligations due to higher ECB interest rates.
The development of the Vulnerable Support Scheme took into account the existing supervisory framework and was reviewed by the European Supervisory Authority (SSM). The specific conditions and specifications are described in detail in the attached annex.
The subsidy scheme includes all existing loans to vulnerable borrowers, regardless of the bank of origin of the loan, whether it is regular or not, whether it remains on the bank’s balance sheet or is transferred to third parties. Based on the above criteria, it is estimated that at least 30,000 borrowers are eligible for subsidies, for loans of at least €2 billion.
The four systemic banks will assume the total cost of the program jointly and equally, within the framework of corporate social responsibility programs, which are developed by each bank separately.
In addition, in the meeting with the Minister of Finance, the following was discussed:
“Issues related to the extrajudicial work mechanism stipulated in Law No. 4738 of 2020. The banks affirmed their support for the out-of-court private debt settlement mechanism, which, together with bilateral debt settlements, is a tool important for private debt management.
In the course of cooperation with EGDICH, the reduction of interest rates for relevant algorithm settings has already been examined with the Special Secretariat, while proposals for further optimization are also being examined and are expected to be finalized early. of the next year. The goal is to significantly increase the approval rate for borrowers who apply for debt settlement through an out-of-court mechanism, including those who realize they have experienced a decline in their income.
The last few months have already seen an increase in approval, a trend that is expected to continue. Reducing non-performing loans to a single-digit ratio is an overall success for the Greek economy and paves the way for the country to return to investment status.
The course of interest rates, as determined by the European Central Bank, and the impact of monetary policy on deposit rates. The Greek banking system guarantees citizens’ savings and the country’s business development prospects.
This was also confirmed during the last three years, with interest rates on deposits staying in the positive zone, at a time when average interest rates on term deposits in the Eurozone were at negative levels, hovering around – 30 basis points. As a result, time deposits in Greece have generated much higher returns than in the eurozone, a development that has seen interest rates for Greek companies approach or exceed 300 million euros.
In yesterday’s meeting with the Minister of Finance, each bank individually committed and based on its business strategy to constantly review the interest rate policy, which resulted in the process of covering the deviation registered in the last two months as a result of greater speed in the adjustment of European banks, which started from the negative interest rates of previous years. Greek depositors are already being offered a number of options that combine safety and profitability.
For example, term deposits of 12 months or more have annual returns, depending on the bank and the amount, that reach or exceed 0.80%. Each bank will continue, separately and independently, to adjust its deposit rates, taking into account relevant ECB decisions, internal policies, and general money market conditions.
Fees are important for various simple banking transactions. Each bank individually and based on its commercial policy plans and reviews a series of commissions for the provision of banking services in accordance with current European legislation.
It is indicated in this section that with regard to incoming and outgoing transfers, DIAS -a national clearinghouse for interbank payments, in which the four systemic banks are shareholders- has developed a series of electronic services that are provided to clients, companies, and people.
For example, with the existing IRIS payment service, it is possible to transfer money for free from any person, whether natural or legal, up to the amount of 500 euros per day, in real-time through mobile banking, without having to Non-mobile number account: is located in the secure payment environment, in accordance with the European SEPA instant credit transfer system.
Each bank, based on its commercial policy, carries out targeted commercial actions throughout the year (subsidy programs for its customers for operations with debit and credit cards), in collaboration with retail. It is estimated that the local banking system will spend a greater amount in 2022, some 50 million euros, to finance specific programs, an amount that goes directly to cardholders and ends up in Greek companies, contributing to increasing their turnover.
Finally, we must not forget the most important contribution of banks in terms of corporate social responsibility, since through sponsorship programs they support institutions and organizations in the health, society, education, forest firefighting, and culture sectors, with similar amounts in the last four 60 million euros.
