Strategic default

Law 3869, known as the "Katseli Law" after the former minister who introduced it, has evolved into a clause that is being used to protect strategic defaulters, offering shelter to tens of thousands of devious debtors.

In a bid to spot strategic defaulters ahead of the extrajudicial settlement process, authorities in cooperation with banks are planning to create an asset register for debtors that will even include money forwarded abroad over the last five years.

Banks are putting an end to the informal immunity granted to strategic defaulters, switching their tactics to the more active pursuit of dues. Tackling the problem more efficiently could fetch hundreds of million of euros in liquidity.

The mission to restructure Greece's overindebted enterprises runs the risk of turning into a fountain of catharsis, with strategic defaulters being pardoned, while everything that has not been done to clear the bad debt backlog over the last seven years must now be completed within the next few months.

The Hellenic Bank Association is asking for changes to the bill on the extrajudicial settlement of debts to lenders, warning it could turn into a refuge for strategic defaulters.

Bank officials note that unless some modifications are made the new mechanism will torpedo the effort to reduce nonperforming loans, which would have dramatic consequences on the banks' capital base.

Twenty-one percent of all nonperforming loans in Greek banks' portfolios, worth more than 10 billion euros, concern borrowers who will not pay their dues despite being able to in anticipation of some form of favorable arrangement.

Some 400,000 borrowers with expired debts are about to be labeled "noncooperative" by banks, as they avoid any contact and communication with their lenders.

A people’s movement against foreclosures of underprivileged citizens’ by the Greek state is gaining momentum, after a series of protests inside court rooms, ruling on cases of property seizures, resulted in physical confrontation with police.

Four proposals for non-performing (so-called “red”) loans have been place on the table by banks after the Euroepan Central Bank’s stress tests calculated that these loans amount to 107 billion euros.

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