Banks ask for extension to moratorium
Local and many other European credit institutions have submitted a request to the European Banking Authority for the inclusion of new loans in a repayment moratorium. The deadline for a bank to apply a payment freeze due to Covid-19 expired on September 30, but the intensity of the crisis and the successive lockdowns are forcing the supervising authorities to review their position.
The moratorium so far only concerns performing loans, i.e. those that up to the end of 2019 were being properly serviced. For Greek banks, the protection of the healthy section of their portfolios is crucial, as in case a large part of their serviced loans turns nonperforming, the plans for returning to profits would be abandoned.
However, the problem for households and enterprises is not only focused on loans properly being repaid until recently, but is more general and concerns loans that were already bad or became unpaid because of delays. Officially, overdue private arrears add up to 90 billion euros and remain the most important problem in the local economy, with €60 billion owed to banks while the other €30 billion have been transferred to funds in the last two years.
