Filenews 23 June 2024 - by Eleftheria Paizanou
After the calm brought about in recent months by the change in the legal framework for foreclosures, new legislation submitted to Parliament by the parties comes to upset the banking sector.
AKEL, DIKO and DIPA submitted on Thursday two bills, which retouch the legislation on foreclosures and at the same time put a brake on interest. What worries the government and the central bank is whether the other parties will pull from the drawers of Parliament other bills that may put the economy in trouble.
On the other hand, the parties believe that the proposals will hardly disrupt the banking system, as it has non-performing loans of €2 billion. "only", while the remaining bad loans, amounting to €22 billion, are held by credit acquiring companies.
The new proposals
The two new proposals were submitted to the Plenary Session of the Parliament by Aristos Damianou of AKEL, DIKO MPs Zacharias Koulias, Pavlos Mylonas, Panicos Leonidou and Christos Orphanides, as well as MP Alekos Tryfonidis.
With the first bill they propose a new amendment to the law on foreclosures. They suggest that, after the sale of a mortgaged property, if the money received from creditors from the sale or auction does not cover the amount of the mortgage debt, plus interest, the balance of the debt should be written off.
The second bill calls for an amendment to the law on Interest Rate Liberalization so that the credit institution does not charge additional interest in case the outstanding amount of the credit facility, including interest, amounts to twice the original debt.
The issue of foreclosures has always provoked social reactions, with banks arguing that the continuous efforts of parties to change the institutional framework jeopardized the foundations of the country's economy and financial stability. It is worth noting that, despite the strengthening of the legal framework in the last six months, unfortunately borrowers do not use tools provided by law to protect their properties.
It is a given that creditors will not accept the changes for foreclosures or the non-imposition of additional interest. The Central Bank and the Ministry of Finance are expected to move in the same line.
It is recalled that, a few days ago, strong reservations were expressed in the parliamentary Committee on Finance, when the proposal for a law by individual MP Kostis Efstathiou was discussed, which seeks to put an end to compound interest by banks on overdue loans.
On the table and taxation of banks
In the meantime, in addition to the specific proposals, which cause great concern to banks and credit acquiring companies, AKEL's proposal for a law on the taxation of banks' superprofits due to the continuous increase in interest rates is expected to be put before the parliamentary Committee on Finance for discussion soon.
The draft law provides for the imposition of an extraordinary levy of 5% on net interest income for the years 2023 and 2024, and the creation of a fund with this money to implement state plans for housing policy.
Central Bank Governor Christakis Patsalides has already disagreed with the bill, warning that it will cause more harm than benefit.
Bank officials have spoken out against additional taxes on banks, as they have publicly argued it would deal a serious blow to the country's credibility.
