Extrajudicial mechanism: In the queue for a “haircut” debt of 25 billion euros

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Extrajudicial mechanism: In the queue for a “haircut” debt of 25 billion euros

The total figures bring the total number of requests for adjustments to 45,800 and the value of loans to be adjusted to €25.3 billion

New debt arrangements from 1.5 to 1.8 billion euros through extrajudicial mechanism the Ministry of Finance expects from banks and management companies in the next 5 months, giving the message for “harder work to benefit more citizens and to successfully settle their debts”. The aim is for the set of settlements through the out-of-court mechanism to reach a total of 3.9 billion euros, increasing the effectiveness of the mechanism which, according to the data released by the Ministry of Finance, offers settlements with an average “haircut” of around 20% for debts to the State and 30.8% for debts to financial institutions.

The message to speed up regulation was given to banks and management companies during the meetings it held back-to-back on Wednesday and Thursday Finance Minister Christos Staikouras with the managements of the Greek banks and the heads of the largest management companies, opening the curtain on the meetings with representatives of the financial sector for 2023. The general director of prudential supervision and resolution of TTE Spyros Pantelias also participated in the meetings and, according to information from ” K”, the Minister of Finance asked for the intensification of efforts in matters of regulation so as to limit the cases of debtors who are led to an auction. It should be noted that the issue of the auctions is at a tipping point, as the discussion in the Plenary Session of the Supreme Court is imminent on January 26 on whether the management companies can, as trustees of the funds in the context of the “Hercules” securitizations, proceed with enforcement measures .

Pending the relevant decision, as company representatives note, they have every reason to proceed with arrangements avoiding auctions. Banks and management companies committed to more loan arrangements in order to reach the target of increasing arrangements by 1.5-1.8 billion euros in the next 5 months. To date, 6,400 settlement requests for debts of 2.1 billion euros have been examined out of court. Also, another 5,500 requests for debts worth 3.7 billion euros are in the stage of final submission and negotiation, while another 33,900 requests for debts of 19.5 billion euros are in the initial stage of their submission. The overall figures bring the total number of applications for adjustments to 45,800 and the value of loans to be adjusted to 25.3 billion euros and the fact that the completed applications of citizens and the rates of debt adjustments are multiplying every month, certifies, according to the finance minister, that it is “the most successful of the last 12 years”. According to the data of the Special Secretariat of Private Debt:

• 74% of the candidates to be settled or settled debts concern debts of natural persons and only 26% debts of businesses.

• 79% is to banks and management companies and 21% to the State.

• The average settlement period for debts to the State is 18 years and for debts to financial institutions 15 years.

• 33% of the debts were settled with a duration of more than 20 years.

• The average write-off rate for debts to the State is 20.4% and for debts to financial institutions at 30.8%.

• 39% of the arrangements (about 320 million euros) have received a cancellation rate greater than 30%.

• 54% of settlement proposals have been accepted by debtors (991 million out of 1.8 billion euros).

• The approval rate from banks and management companies is 63% and from the State reaches 93%.

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