The government is preparing a new settlement for Swiss franc loans, delaying announcements after the Thessaloniki International Fair and reducing expectations for larger discounts. According to information from “Kathimerini,” the proposal from the Ministry of National Economy provides for exchange rate discounts from 10% to 25%, with strict participation conditions.
Borrower categories and discount rates
The government proposal divides beneficiaries into four categories based on income and asset criteria. The maximum 25% discount on the exchange rate requires strict limits, resulting in the majority of Swiss franc borrowers falling into the 10% haircut category.
A small number of borrowers are expected to receive the larger haircuts of 15% to 20%, while the fourth category offers a horizontal 10% discount without income and asset criteria.
Who the Swiss franc loan settlement affects
The proposal exclusively targets compliant borrowers who service their Swiss currency loans, including those who have restructured. It does not cover non-performing loans classified as “red.”
The total amount of Swiss franc loans reaches approximately 2.8 billion euros, based on Mediobanca analysis. The distribution by bank is as follows:
• Eurobank: 1.8 billion euros
• Piraeus: approximately 600 million euros
• National: 200 million euros
• Alpha: less than 150 million euros
Additionally, it is estimated that 1.5 billion euros have been sold to funds through the securitizations of the “Hercules” scheme.
Asset limits and income criteria
Asset limits function as a critical factor for borrower categorization. For the 25% discount, the ceiling for real estate value is set at 185,000 euros, an amount that excludes a significant portion of borrowers.
Given that Swiss franc loans were granted during the period of high prices in the Greek real estate market, the 185,000 euro limit drastically restricts beneficiaries of the maximum discount.
For the remaining categories, limits are set as follows: 231,250 euros for 20% discount and 277,500 euros for 15% discount. Alongside asset limits, income criteria are applied that further complicate the equation.
Interest rate conditions and conversion to euros
Swiss franc loans are priced based on the SARRON rate, which replaced LIBOR and is currently at zero levels. The spread burdening these loans averages around 1.5%.
The ministerial proposal provides for fixed interest rates from 2.30% to 2.90% for those choosing to convert their loan to euros, depending on the borrower’s income and asset situation.
Participation requirements and banking provisions
Borrowers entering the settlement must waive other legal remedies, a fact that further limits the perimeter of participants. According to estimates, ultimately no more than half of the beneficiaries are expected to participate.
Banks have adjusted their calculations based on this forecast, which explains the conservative increase in provisions. They consider this level sufficient to cover losses from the exchange rate haircut.
Based on the half-year results of the four systemic banks, provisions for potential losses from the loan portfolio totaled 454 million euros. Eurobank recorded the highest provisions at 155 million euros, followed by Piraeus with 129 million, Alpha with 92 million, and National with 78 million euros.
