SYRIZA slams loan mechanism

A SYRIZA announcement claimed to have information that the government's plan for out-of-court settlements that will cover all of a borrower's creditors, both state and private, will seek to facilitate such settlements by forcing all creditors to acquiesce to any business plan approved by at least 35% of a borrower's private creditors.

According to the the party's economists, since banks tended to hold the lion's share of any given company's debt, in practice this would mean that banks would be in a position to decide how a businesses debts will be settled, giving priority to improving their portfolios over other considerations and taking precedence over social insurance funds, the state, employees and suppliers.

The announcement stressed that the move no longer gives priority to debts to the state and social insurance funds, as previously, but instead seeks consensus on capitalizing a part of the debt corresponding to the share held by all creditors, so that banks do not have to carry the entire weight.

According to SYRIZA, the only solution was a left wing government by them that would implement policies based on growth through the abolition of austerity and complete its proposal for managing private debt, the announcement added. The party said its position called for bank reform by clearing the portfolios from risky and bad debt and a return to providing loans "on terms of social justice, which are an end to austerity and the liberation of society and the economy from the burden of NPLs".

The party's proposal for managing such business and household loans calls for an interim public body for managing private debt, which will undertake to establish and supervise a simple, effective, transparent and fair program for settling non-performing, or so-called "red" loans, using objective social criteria that protect the weakest and those hit by the crisis. That program could then be extended to  manage overdue debts to the state, social insurance funds and public utilities.

The loans that could not be paid off and for which a settlement via banks would be unsustainable, would then be transferred to this interim body, SYRIZA said.