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Greek 'Red' Loans to be Sold to Foreign Distress Funds

bank-of-GreeceGreece’s creditors ask for a comprehensive bad loans settlement plan to be completed and legislated by December 15 as part of the bailout agreement requirements.
After resolving the non performing mortgages issue, the Greek government has to present a strategy on the settlement of ‘red’ business loans. The non performing business loans are estimated at 50 billion euros.
Hellenic Financial Stability Fund (TXS) sources say that there are several investors and distress funds showing interest in buying ‘red’ loans. Their aim is to become shareholders in order to make profit after the businesses turn profitable again.
The Economy Ministry is in favor of this option for certain business sectors, provided that the loans exceed 1 million euros.
The Greek government wants to protect small and medium-sized businesses that can’t service their loans due to the economic crisis. The plan is similar to the one for mortgages of low-income families the creditors accepted.
Greece’s creditors want to expedite the procedure of banks selling bad loans to investors and distress funds. According to a study conducted by Nomura Investments, the Japanese holdings company suggests distress funds and Greek banks to establish joint companies for the purchase and sale of bad business loans and mortgages.
The Finance Ministry opposes any selling of non performing mortgages in fear of public outcry. At the same time, they are drafting the legal framework on how distress funds can work jointly with Greek banks and the central bank and have the rights and obligations of financial institutions. This way, distress funds operating in Greece jointly with banks, will be monitored by the Greek State.

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