By N. Malliara
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Greece’s systemic banks are reportedly ready to sell-off some 10,000 foreclosed properties in the country by the end of the year in a new electronic auction platform, which is expected to debut late this month, as immense pressure continues to be exerted by institutional creditors on the Greek government and lenders to reduce “bad debt”.
Inaugurating an e-auction platform would overcome months of blocked auctions at local courts and private notary offices, and come after years of a state-imposed moratorium amid the punishing economic crisis in the country. The latter, replete with three bailout memorandums, also witnessed three capitalizations of Greece’s battered systemic banks.
Associations representing notaries recently appeared ready to rescind a previous decision to abstain from auctions until the end of the year.
Currently, the value of non-performing loans (NPLs) in the country easily exceeds 100 billion euros, of which a significant chunk involves mortgages and loans secured with property as collateral.
As such, the prospect of resuming auctions of foreclosed properties – via an electronic platform – is expected to also reduce the phenomenon of so-called “strategic defaulters”, individuals or companies with the means to service their loans but who anticipate more favorable terms in the future, or even “write-offs”.
Given the fragile state of an ongoing Greek economic recovery and an utterly burst property “bubble” in the country, which has wiped off real estate values and frozen domestic demand, Greece’s four systemic banks forecast that 80 to 90 percent of properties up for auction will still wind up in their portfolios.
As such, the emphasis will be on better managing real estate portfolios, which will simply increase in number and value, including greater cooperation with realtors in order to sell properties in regular transactions.
Another option studied by Greek lenders is cooperation with foreign platforms that manage real estate, or even the selling-off of mortgages on the secondary market.
Increased “housekeeping” of Greece’s NPL- and NPE-swamped credit system is a standing demand by the Single Supervisory Mechanism (SSM), as the latter wants Greece’s systemic banks to acquire collateral as soon as possible, especially from “strategic defaulters”.
