New Framework For Unserviced Loans - Measures to Manage Over-indebtedness

The Bank of Greece is seeking to put order to ‘red’ loans worth 70 billion euros, putting in place a ‘framework of oversight obligations for the management of outstanding liabilities and unserviced liabilities.” According to an article in the economic daily Naftemboriki, it is expected that a large percentage of the 18.5 billion euros in mortgages will be managed, about 37.5 billion euros in business loans and about 14 billion euros in consumer loans.

In its decision the Bank of Greece refers indicatively to the 22 internationally customary types of practical adjustments to deal with indebtedness.

Among these, says the article, are the partial write-off of debts, the provision of additional guarantees on the part of the borrower and the sale or renting of a mortgaged property.

The same article also notes that for businesses among the indicative measures presented is the functional restructuring with a change in the management of the business. Additionally exchanges of debt for share capital are also proposed.