Foreign funds buy badly performing loans in Greece

The Greek government is reportedly troubled by the potential entry of distress funds, which are buying problematic assets in Europe and lately in Greece due to the debt crisis.

The government is promoting a specific regulation in the bill for indebted households to determine the function of specific funds in the domestic market, as newspaper "Naftemporiki" reports.

Trying to clean up their balance sheets and reduce their assets, banks are expected to go into sales of loan packages. The rise of non-performing loans in more than 25% of the total portfolio of the system - more than 57 billion euros of “red” loans - is of intense concern to the bank managements and supervisors, as they consider such transactions only a matter of time.

In particular, Greek officials are considering of including in the bill an arrangement whereby distress funds that bought or will buy red portfolios of loans from banks will be forced to "a service address" in Greece and thus be subjected to the national law.

Question by Mihelakis

New Democracy MP Yannis Michelakis submitted a question to Finance minister Yannis Stournaras on this issue: "There is a clear risk that distress funds might acquire loans from Greek banks at a bargain price and then μακε αττεμπτσ οφ profiteering turning on legal actions against the borrowers who are unable to cope in time with their obligations in order to receive even a small percentage of their claim, which will be clearly higher than the paltry price paid by the bank to buy the loan," the MP says.

And emphasizes that the State should immediately and effectively protect Greeks from irresponsible borrowers and their uncontrollable speculative moods.