Banks unhappy with draft bankruptcy code

Banks are raising serious concerns about the draft bankruptcy code the government is preparing and the clauses on the protection of borrowers' main residence, believing it will serve as another method for delays at the expense of lenders and the state.

The new bankruptcy code will allow borrowers who declare themselves bankrupt or at risk of having their home auctioned off to sell their main residence to a state entity and continue residing there as tenants with a buyback option after a number of years.

Banks argue that the criteria according to which a household can be considered vulnerable so as to qualify for the clause's provision are particularly generous. Bank officials explain that as 90% of loans cover a property valued at under 200,000 euros, virtually all borrowers will qualify for state support, paving the way for the universal use of the primary residence...