Govt denies it relinquished right of borrowers to buyoff loan before distress funds sale

26 September 2016
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The latest political furor that erupted in the country over the weekend involved the pressing issue of non-performing loans (NPLs), with the government rejecting sharp criticism that it relinquished the option of a borrower buying off the entirety or a portion of their loan before the latter is sold to a distress fund.

Economy Minister Giorgos Stathakis said creditors insisted on the matter, not the leftist Greek government.
A front-page story over the weekend charged that the Tsipras government relinquished the right, which would have given borrowers – once a legal framework is modified in the country, as per a third memorandum obligation – the first right over their loan, be it a mortgage, business financing or even a consumer loan.

Stathakis said that after the negotiations “we have the following (situation): Before a (Greek systemic) bank sells the loan (portfolio) it is obliged to make an offer to the borrower in the previous 12 months. Therefore, there is a safety mechanism for this issue. It is misleading that this (regime) exists in Cyprus, it does not exist there, the same situation as Greece exists, with the legislation that we have submitted.”
Stathakis maintained that a code of ethics drawn up by the government and the Bank of Greece stipulates that a loan can be repurchased at a rate that is below the nominal value.

NPLs in the country held by systemic banks now exceed 110 billion euros.

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