Later this year, the government will formally seek European Commission approval for the transformation of the failed cooperative bank’s successor legal entity into an asset management company.
In parliament on Monday, finance ministry spokesman Anti Chrysostomou-Lapatioti said they would approach the EU’s DG Competition, likely in July.
At the same time, he told MPs, the government is developing a mortgage-to-rent scheme to help vulnerable borrowers. The purpose of the scheme will be to protect the main residential and commercial premises.
In June 2018, the state-owned cooperative bank was forced to sell its operations to Hellenic Bank after it failed to reduce non-performing loans fast enough, resulting in a reduction in its equity.
Kedipes was set up as a successor to manage €8.2 billion in NPLs, real estate and other assets that were not part of the Hellenic Bank transfer.
Among them were overdue loans in the amount of about 7 billion euros.
The remaining assets and deposits of the cooperative were transferred to Hellenic Bank. Kedipes will take on more than €8.3bn of assets, of which €6.97bn is in NPLs, €0.5bn in “good” loans, about €620m in real estate, as well as cash funds and shares of other companies in the amount of 230 million euros.
The cooperative also had to pay 139 million euros to 1,026 employees who opted for the voluntary pension scheme.In the meantime, Kedipes is gradually paying back the loan guarantees provided by the state as part of this deal – the liquidation of the cooperative.
Kedipes chairman Lambros Papadopoulos said that since its inception in September 2018, the organization has returned about 1.1 billion euros to the state.
As for the new assistance scheme developed by the government, the Ministry of Finance said that it would be similar to the Estia plan, which, however, did not receive much support, and would cover basic residential and commercial premises worth up to 350,000 euros.
The Ministry of Finance is currently formulating eligibility criteria.
Lapatioti said they expect the scheme to have an impact on public finances, but the extent will depend on the amount Kedipes pays to purchase the mortgage portfolio and the rent it pays debtors.
“The state will pay rent for vulnerable borrowers,” she added.
Rental Mortgage Scheme
In a “mortgage-for-rent” scheme designed to help homeowners at risk of losing their property due to mortgage arrears, a person voluntarily transfers ownership of their home to their lender. A business buys a house from a lender and becomes a landlord. The borrower no longer owns their home, but will continue to live in it as a tenant.