Greece and its international lenders agreed early morning hours on Tuesday (17.11) the
measures needed to unlock the disbursement of a 2-billion-euro sub-tranche and
a 10-billion-euro recapitalisation of banks, following lengthy negotiations
over a series of days.
"We have reached agreement on everything,
including the 48 prior actions" said Finance Minister Euclid Tsakalotos,
who at a news conference together with Economy minister Yorgos Stathakis
pointed to a key settlement with creditors on bank
home foreclosures,
which will protect 60% of debtors with non-performing bank loans. From about
400,000 of 1.2 million home loans that are not being serviced, there will be an
absolute protection to around 25% of borrowers from losing their primary
residence to auctions, while a further 35% of borrowers will be conditionally
protected, as determined by income and asset criteria. According to FinMin
officials, the handling of the remaining non-performing loans (NPLs or
"red loans") and their sale to foreign distress funds will be
included in a next draft bill in December.
Eurogroup President Jeroen Dijsselbloem and European Commissioner for Economic
and Financial Affairs Pierre Moscovici welcomed the "substantial
agreement" on all pending matters of the reforms that are included in the
first package of the prior actions, as well as on the reforms referring to the
financial sector, which are very important for the successful recapitalisation
of the banks.
The
current set of prior actions was submitted yesterday (17.11) in Parliament in
an omnibus bill to be voted on by Thursday and includes the protection of the
primary residence from auctions for defaulted loans, changes to the debt
settlement payments in 100 tranches with stricter terms so that people who
delay payments are penalized, and VAT equivalent measures in lieu of that on
private education institutions. Upon the bill ratification, the Euro Working Group is expected
release the 2 billion euro sub-tranche loan and unlock the disbursement of the
10 billion euros in
recapitalization aid to the country's four main banks.
The news of the breakthrough also helped Greek bond yields hit their lowest in more than a year and lift the
main Greek stock index, which was up 2.4 percent in mid-afternoon trading with
banking stocks rising about 10 percent.