“Banks have the right tools and should identify those borrowers who are experiencing temporary difficulties in a timely manner and take appropriate action if necessary.” it explains me his statement in “K” TTE commander Yannis Sturnaraswho met with the administrations last night system banks in an attempt to generate a final proposal for vulnerable households to be submitted to SSM. Mr Sturnaras notes that “the state, both during the pandemic and today, has taken and implemented important support measures, especially for the weakest sections of society”, and, as he emphasizes, “with the data at the moment there is no need for a new contribution” . state to the banking system.

OUR TTE working with banks to ensure that a proposal to support vulnerable households by subsidizing 50% of the increase from higher interest rates does not burden banks’ capital with additional reserves. According to the information, the planned technical solution can prevent this case, and the condition is that the contracts for subsidized loans will not be changed. For this reason, the proposal that will be presented provides for the creation of a general fund in the form of a piggy bank, into which banks will contribute in order for the subsidy to be provided.

The proposed proposal excludes securitized loans and limits the amount of subsidized loans to those loans that are in banks’ portfolios, and not to securitized loans. “Banks cannot subsidize loans that are no longer their property, that is, those that have been transferred to funds,” competent sources emphasize. Based on these data, the perimeter of loans to be subsidized is limited to just under 2 billion euros, and the number of vulnerable households that will be supported is estimated at around 30,000, while the burden on banks will be light and manageable in terms of its cost.

The issue of controllable costs, so that profitability does not suffer, is still a priority for banks, from which competent sources reject the developed excess profit argument. Banks are ‘trying to get back on their feet after a 10-year crisis’, they characteristically note. competent sources in “K”, emphasizing that “they operate under strict European supervisory rules with clear instructions to further strengthen their capital, and their profitability is essential in this direction.” On this basis, they respond to the argument in favor of:

1. Super profits. In 2022, profitability is estimated at 3.5 billion euros, but bank sources explain that most of it – estimated at 30% – is based on profits from one-off sources such as interbank interest rate trading, bond profits, as well as earnings from foreign operations. It is recalled that in the 9th month of 2021, banks showed a combined loss of 4.5 billion and, given that the profitability of 2022 is also largely based on excess profits, the excess profit argument, as they emphasize, is without merit, also citing the fact that “bank shares trade well below their book value”.

The creation of a “piggy bank” in which banks will set aside funds for the provision of subsidies is being considered.

2. Grants. Profitability and liquidity, according to the same sources, allow banks to issue new loans, so credit expansion has reached 12.5% ​​this year with an increase of 6%. “If profitability and revenues are eroded through intervention, lending will be tightened accordingly,” the banks say, sounding the alarm that “a growth narrative will be found without the necessary financial base.”

3. Interest rates on the loan. Maintaining them at higher levels such as eg. housing loans compared to the rest of the eurozone, according to banks, the high cost of bad debts, which is at least twice as high as banks in Europe. The main reason for this, as they note, is “the blow dealt during the crisis and not only to the payment culture, since even today the political system indirectly encourages the actions of strategic non-payers who hide behind the unprotected sections of society.”

4. High commissions. According to banks, fee income as a percentage of organic income is one of the lowest in the euro area, and this element is also being addressed by supervisory authorities, citing a corresponding letter from SSM head Andreas Enria.

5. Chapters. Since 2008, banks have not distributed dividends and all their profits remain on their balance sheets, supporting their capital base. High capital ratios, they emphasize, imply “greater security for savers and are an element of the health of the economy as a whole, as they are taken into account in determining a country’s credit rating.” For every euro of new funds, each bank can provide about 7 euros of loans, and thus maintaining high capital adequacy implies a large funding opportunity.

“Banks will continue to support their customers with social responsibility, as they have done consistently for many years, but strictly within the framework of supervisory rules,” the same sources conclude, emphasizing that “protecting and strengthening the payment culture, which is necessary for the proper functioning of the banking system and the economy as a whole is the responsibility of the banks, but also the responsibility of the political system.”