May 30, 2023

Athens News

News in English from Greece

Auctions for "red loans": Brussels asks for immediate action

The number of “red non-performing” loans on banks’ balance sheets has decreased, although the corresponding figure is still significantly higher than the European average.

Approximately 90 billion euros of “red” loans have been transferred to collection funds, but this seems to worry technocrats in Brussels, who are not satisfied with the auction system.

“The interest of debtors is still low (in relation to the second chance platform, i.e. the main bankruptcy proceedings, insolvency to fulfill payment obligations). And even more limited with respect to the settlement process (i.e. debt restructuring in court),” the commission notes, hammering in a “nail”: “Partly this can be attributed to perception by citizens that there is no real threat of confiscation“. What does it mean? Brussels believes that the Greek authorities remain “flexible” in relation to those who must, but do not use the possibilities of agreements.

Against, European technocrats see a growing interest in social security for the vulnerable, although the numbers are far from expected. This interest is related to recent initiatives taken by systemic banks (subsidizing interest rates), as a result of which, by the end of March 2023, 2,950 debtors will receive vulnerable certificate.

According to the commission, this is well below initial expectations. However, given the high number of pending applications (36,483), the number is expected to increase significantly. Anyway all parameters of the new bankruptcyincluding out-of-court proceedings, will be under constant control of Brussels.

Now let’s move on to auctions, which are considered “taboo” in Greece, but in Brussels it seems to be treated differently. According to the data in the report, the number of auctions is increasing, but there are no bidders in a large percentage (sterile auctions).

In 2022, 51,960 auctions were scheduled, of which 75% (i.e. 38,869) were held. The figure is higher than in previous years. This trend largely continued in the first quarter of 2023 with 11,012 online auctions. However, according to the commission, a high percentage of fruitless auctions is still a concern.

In the first quarter of 2023, about 78% of completed auctions were unsuccessful, and, according to Brussels, after introduction of a mechanism for automatic adjustment of the starting price no improvements yet.

According to the commission, additional factors influencing the failure of auctionsare the lack of available funding for potential interested buyers and limited market demand for some assets, although an increase in the proportion of property purchased by third parties at auction indicates a clear improvement in this regard.

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