Greek Bank Bad Loans Spike 1B Euros in January


Branch of Piraeus Bank in Athens. (Photo by Eurokinissi/Giannis Panagopoulos)

ATHENS – Customers expecting deals or write-offs stopped paying their bad loans to the tune of an additional one billion euros ($1.06 billion) in January, causing more anxiety among Greece’s troubled banks.

Greeks hit by waves of big pay cuts, tax hikes, slashed pensions, and worker firings have been unable to pay their mortgages, credit cards and loans, creating a mountain of non-performing loans hindering the banks, despite some 50 billion euros ($53.07 billion) in injections from international bailouts keeping the economy from going under.

There had been a trend of bad loans being reversed but with news that the country’s creditors are pushing for banks to shed themselves of the burden, the ruling Radical Left SYRIZA of Prime Minister Alexis Tsipras, reneging again on campaign promises, is letting collection agencies chase people and foreclose on their homes.

Exempt so far are many major loans critics said were given to politically-connected customers and political parties who aren’t repaying them and aren’t being hounded, including the former ruling New Democracy Conservatives and Democratic Alignment (former PASOK) who owe 250 million euros ($265.36 million) and won’t say there the money went.

The troubling increase in bad loans has created new worry about the banks’ mandated target of cutting them as agreed with the Single Supervisory Mechanism (SSM) of the European Central Bank for the first quarter of this year.

Bank sources told the newspaper Kathimerini the phenomenon is tied to uncertainty from the government’s inability to complete a third second bailout review, fears for a rekindling of the crisis and expectations of write-offs.

Senior bank officials said that besides so-called “strategic defaulters” who can afford to pay but won’t that many borrowers aren’t co-operating with banks to restructure their debts, hoping for the loans to be forgiven.

The bad loans, along with deferred tax assets for the tackling of banks’ losses from the write-off or sale of bad loans are setting off jitters in the banks.

The bad loans have to be cut by 2.5 billion euros ($2.65 billion) by the middle of March under the set goals.