Request to banks: the government is looking for solutions to support the population in a difficult period

The government is awaiting the response of banks to a number of questions asked by the Ministry of Finance, the answers to which it intends to receive, at the latest, within the next 12 days.

There is moderate optimism among financiers that banks will finally rise to the occasion and take concrete action to support society in this admittedly difficult period that the country is going through.

The Minister of Finance, in his Sunday speech on SKAI TV channel, paid special attention to lending and deposit rates, as announced on Friday by the Bank of Greece. As he emphasized, “the average interest rate on new deposits set at 0.05%. Average interest rate for new loans in October increased by 0.26% and is 4.86%, which unacceptably. I think that banks should immediately and significantly raise deposit rates and cut interest rates on new loans“. He emphasized that a substantive decision must be made before the next meeting scheduled in 12 days.

From the point of view of banks, the above questions are part of a broader framework that “should be compatible with the European Supervisory Authorities”. However, most the tricky part of the proposed agreement is the borrower support model, since this is where the greatest degree of disagreement between banks and the government can be found. The meeting last Thursday did not produce the desired result because there is a big difference between the two sides in how they approach this issue.

Banks are offering a model similar to the Bridge model that the government implemented during the pandemic, with the difference that this time costs will be shared. On the other hand, the Ministry of Finance seems to prefer the Spanish model without making it a condition, but in any case it wants to find a solution that does not create a financial burden. Minister of Finance Christos Staikouras has given the banks two weeks to submit proposals on a number of issues that concern society in this difficult period of time.

The banks’ counterargument is that a solution that would have bank support only, cannot pass through the supervisory authorities and therefore is inherently an “empty sound”. In fact, they characterize the Spanish model, which provides for a series of interventions in favor of borrowers with costs to be borne by banks, as “dead” to Greek realities.

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