World Economy

Greek Bank to Cancel Poorest Customers’ Debt

Greek Bank to Cancel Poorest Customers’ Debt
Greek Bank to Cancel Poorest Customers’ Debt

One of Greece’s largest banks will wipe away the debts and freeze the mortgages of clients who owe up to 20,000 euros ($21,600) in a move designed to ease the burden on its crisis-hit customers.

The Bank of Piraeus, one of the country’s four major banks, decided to write off or restructure debts in response to the “humanitarian crisis” through which its poorest clients were living, the company said in a statement, Sputnik reported.

Any clients who carry up to 20,000 euros in credit cards and consumer loans would have their debt written off completely, the bank said, while mortgage payments would be frozen and any associated interest forgiven.

The cut to mortgage loans only applies to interest imposed for as long as the loan remains frozen, which will apply up to the end of this year.

To be eligible for the debt relief, clients must meet specific criteria and already be enrolled in a benefits program recently launched under Greece’s radical left Syriza government, which came to power in January.

The new social safety net legislation, part of the platform which helped Syriza ascend to power, was opposed by the European Union, which pressured lawmakers to drop the measures.

It also includes housing support and subsidized food purchases to aid those who have fallen into poverty as a result of the EU-IMF austerity measures imposed on the country, the report said.

Bank sources who spoke to ANSAmed said that while the move will cost tens of millions of euros, it also will pave the way for other Greek banks to take similar initiatives. Those sources added that this is the first case of a mass debt write off under pressure from the crisis there.

 External Debt

Greece’s external debt audit may reform the European Union by serving as an example to other countries and making the bloc more democratic, member of the audit committee on Greek debt Sergi Cutillas told Sputnik.

The Greek government audit committee on the country’s debt was established in April at the parliament initiative. The independent body comprises 30 members, including 15 Greek and 15 international experts.

Over the much-discussed question of a possible Greek exit from the Eurozone monetary union, Cutillas argued that the move, if made, should be supported by a series of measures, including Greek bank nationalization, full control of capital, as well as a structural reform of the economy.