Greek Cabinet Told to Make Deal With Lenders to Receive Aid
November 10, 2015 12:23 PM
ATHENS, GREECE—
Greek Prime Minister Alexis Tsipras told his cabinet on Tuesday to wrap up talks with lenders swiftly this week to get a new disbursement of international aid now held up in a dispute over home foreclosures and non-performing loans.
In the first major standoff with lenders since their being re-elected to office in September, Greek officials were told by euro zone finance ministers on Monday Athens would not get any more aid until it implemented a series of reforms, foremost among them being a tighter foreclosures law on problem mortgages.
Tsipras's office said he had told his cabinet it was a "priority" to conclude negotiations this week to allow the disbursement of 2 billion euros in aid, and another 10 billion to be released toward the recapitalization of Greece's four big banks.
A European Central Bank stress test last month showed Greek banks needed a total of 4.4 billion euros in additional capital to survive a scenario of adverse economic conditions.
Some of the amount is likely to come from private investors with the rest from the 10 billion euros now held in account for that purpose.
Capital shortfall
The amount would supplement attempts now underway by Greece's four big banks to plug up to 4.4 billion euros of their capital shortfall through private investors.
Although banks said they were confident their efforts to lure investors would be successful, they fretted about the timing of the wrangle with Greece's lenders.
"The newsflow on foreclosures created noise and is on the mind of some investors, but overall there is interest in the offerings," a banker at one of the four lenders said. "If there is a fast compromise, it will help."
Discussions have stumbled on the level of protection Greek mortgage holders should have if they fail to repay their debt.
Athens insists resolving the issue should not result in thousands of Greeks at risk of losing their homes. At present, mortgage holders can apply for foreclosure protection if the value of their home is 300,000 euros; the Greek government is now discussing protection based on a home valuation of between 180,000 and 200,000 euros, buffered by a series of income-based criteria.
People losing their houses is a particularly sensitive issue at the moment as Greece prepares to find shelter and food for thousands of refugees and migrants entering the country.
A government source said that negotiations with lenders were continuing, and there appeared to be a level of convergence emerging.
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