The Greek government is expected to announce in the coming weeks a solution through out-of-court settlement for mortgage loans in Swiss francs, according to two sources who spoke to Reuters on Tuesday (1/7).
More than 50,000 Greeks took out mortgage loans in Swiss francs during the 2000s, however the dramatic increase in the franc’s exchange rate against the euro in recent years has made their repayment extremely difficult.
“The proposed settlement will be announced in the coming weeks,” said a senior government official with knowledge of the matter.
20,000 “red loans” in bank portfolios
The plan will be based on voluntary participation and will provide for the conversion of loans from Swiss francs to euros, with a discount on the exchange rate ranging from 10% to 25%, depending on borrowers’ income, a banking source told Reuters.
Currently, of the approximately 37,000 remaining loans, 20,000 are still in bank portfolios, while the remaining 17,000 are considered non-performing and are managed by servicers. The total value of these loans is estimated at approximately 5 billion euros.
According to a government source, this specific arrangement will not affect the “Hercules” program for red loans.
A banker said the cost of the settlement will amount to tens of millions of euros for each bank, depending on how many borrowers choose to participate.
However, borrower associations express strong reservations. As Despina Soniadou, president of the Association of Swiss Franc Borrowers, emphasized: “These are crumbs. The case remains open. We have three class action lawsuits pending in the courts.”
Borrowers argue that the proposed relief, which in many cases will be limited to a few thousand euros, is not enough to offset the increases of around 70% that their loans have suffered.
