Bloomberg
Greece plans to pump as much as 1 billion euros ($1.1 billion) into its banks over the next five years by subsidizing a part of households’ mortgage repayments. Under the plan, some households unable to repay their home loans will restructure their debts with the banks, with the state then paying part of the remaining monthly installments, according to three people familiar with plan, who asked not to be named as details still need to be finalized.
Greek banks are grappling with 88.6 billion euros of bad loans, a legacy of the country’s financial crisis. Mortgages are considered the stickiest component of the banks’ non-performing exposures, with lenders falling behind reduction targets set by their regulator.
The aim is to convert a part of the banks’ non-performing-loan books into performing assets, helping them repair their balance sheets. The annual cost of the subsidy is expected to rise to 200 million euros, the people said. The new framework will support households unable to repay their mortgages who are at risk of losing their primary residence. There will be income and property conditions for eligibility, while borrowers will lose the subsidy if they miss a payment for more than 90 days, one of the people said.