Greece's Ministry of National Economy and Finance, in a press office statement, rejected proposals by PASOK leader Nikos Androulakis on private debt and argued that the government's existing approach protects vulnerable borrowers and the middle class without undermining financial stability. The ministry said the government is instead strengthening the out of court debt workout mechanism through automated procedures, broader coverage, and protection of the main residence, while avoiding the lengthy court delays and uncertainty associated with older first home protection frameworks. The statement challenged specific proposals to restore protections modelled on Law 3869/2010, allow borrowers to buy back their loans before transfer to funds at similar discounted prices, reduce guarantor liability in line with the fund purchase price, require creditor participation in the out of court mechanism without conditions, shift most Swiss franc loan losses to creditors, and impose tougher sanctions on servicers. It said a return to a Katseli-type regime would recreate instability, noting that about 43% of applications under that law were ultimately found by courts not to qualify for protection. It also argued that borrower buybacks would encourage strategic default, curbing guarantor liability would restrict credit, and mandatory creditor participation would conflict with the European insolvency framework and creditor voting rights. On Swiss franc loans, the ministry said many have been securitised with state guarantees through Hercules, meaning a creditor-funded solution could ultimately shift costs to taxpayers. For servicers, it said a strict supervisory and sanctions regime is already in force under Law 5072/2023, with the Bank of Greece and the competent independent market supervision authority having already imposed fines where violations were found.

Original source Back to tracker