Voles Chr. Strike against banks for the out-of-court debt settlement mechanism

The Minister of Finance, Christos Staikouras, presented the results of the measure with the Special Secretary for Private Debt Management, but during his presentation he fired shots at the banks for the process of approving the regulation requests.

“Despite efforts, there are 1,200 completed debt settlement requests pending with financial institutions, corresponding to over €1 billion in debt, which we expect to be completed soon. Financial institutions are also approving a relatively small volume of settlement requests, with significantly uneven That is, we observe an average approval rate of 46%, which worries us, given that the algorithm – and therefore the settings it automatically produces – was the result of an agreement between the state and the creditors, building on the best international standards. At the same time, the debtors also reject a large percentage of debt settlement proposals, while they also show a delay in the procedures for completing their requests”, says the Minister of Finance in the statement.

In detail, the position of Chr. Staikura:

“First of all, on behalf of the Government and the entire Greek society, I have to thank the firefighters, the officers of the Civil Protection, the volunteers, the officers of the Hellenic Police and the entire state apparatus who have been on the front lines of the battle with the flames, under particularly adverse weather conditions, and are doing their best to contain the fire fronts in Attica and other areas of the country.I also want to express my sadness for the tragic loss of a fellow human being.

It is a fact that one of the priorities of the Government, since the beginning of its term, is the optimal treatment of the perennial problem of the high total private debt, especially its smooth servicing.
Private debt which, it is a fact that in times of crisis, such as the ones we have been going through for the last 2.5 years, there is a risk of its swelling, at a global level.

Until today, citizens and the state, we have succeeded, at least, satisfactorily.
The Government, through a wide array of measures, totaling more than 50 billion euros, supported and continues to support the disposable income of households and the liquidity of businesses, preventing the swelling of non-serviceable private debt.
Measures, such as the refundable advance payment, the “Bridge I” and “Bridge II” programs, the financial instruments of the guarantee, the subsidy of fixed costs, the coverage of rents, the reduction of taxes and social security contributions, the double increase of the minimum wage , the measures to subsidize energy costs, the reduction of unemployment, the utilization of the resources of the Recovery and Resilience Fund, the implementation of the new institutional framework for the uniform regulation of debts.
While we are launching other targeted interventions in the next period of time, such as the implementation of the insolvency strategy, the operation of a Public Credit Office, the establishment of a Central Credit Registry, the establishment of a Credit Expansion Observatory.

In particular, through the out-of-court debt settlement mechanism, which was activated a year ago, new rules are established in the settlement of debts to Banks and the State.
Citizens now have the possibility to regulate all their debts to Banks and the State and to ensure a comprehensive, automated, sustainable and realistic solution.
In addition, it is possible for bilateral arrangements with the State, in the event that the debtor does not maintain debt to financial institutions.

The existence of this institutional framework provides a solid foundation, but the solution to the problem requires its immediate and effective implementation.
The truth is that the mechanism, pioneering at the level of the European Union, showed several difficulties in its implementation.
For example, in the collection of the data, in the operation of the platform itself, in the process of final submission of the application, in the speed of evaluation of these by the creditors.
Today, the situation is much better.
Borrower interest is growing, and final submissions are showing increased momentum.

In particular, loans of more than 20 billion euros are in advanced stages of the mechanism, of which more than 3 billion euros have been definitively submitted, corresponding to approximately 6,500 final applications from debtors.
In recent weeks, the rate of completion of applications and their final submission has been increasing.
Building on the intensive efforts – by all involved – in recent weeks, more than 200 applications are completed per week, with an average total of over €200m per week owed.
To date, 425 applications have been successful, including 288 from banks and loan servicers and 137 from the State.
In these arrangements, a debt write-off of up to 33% has been carried out, while the average duration of the arrangements is up to 253 months.

However, despite the efforts, there are 1,200 completed debt settlement applications pending with the financial institutions, which correspond to over 1 billion euros of debt, and which we expect to be completed soon.
Also, funding agencies approve a relatively small volume of regulation requests, in a significantly uneven manner among them.
That is, we observe an average approval rate of 46%, which worries us, given that the algorithm – and therefore the settings it automatically produces – was the result of a consultation between the state and creditors, building on the best international standards.
At the same time, debtors also reject a large percentage of debt settlement proposals, while they also show a delay in the processes of completing their applications.

Therefore, despite the real progress that has been made in the last period of time, there is significant room for improvement, mainly on the part of the financial institutions.
We, as a State, undertake continuous actions to upgrade the services offered by the extrajudicial mechanism.
Banks and loan managers must join the state, fully aware of the new challenges emerging for all of us.
We believe that in the next period of time, they will show due responsibility.
We believe that the full implementation of the law could bring a sustainable solution to over 3,000 borrowers in the next 2 to 3 months, i.e. settle debts of over 1.5 billion euros.
This will be decided – exclusively – by the creditors.
Who must realize that the successful implementation of the mechanism will work for the benefit of everyone, citizens and the state, society and the economy.
I will now give the floor to the Special Secretary for Private Debt Management”.