More than 800 thousand loans, mortgages and credit cards have been rescheduled in the past two years due to the falling income of the Greeks. The president of the Union of Greek Banks George Zanias presented the data to reporters. From early 2010 to June 2012, more than 662 thousand bank loans of different types were re-negotiated. Households and citizens who have lost their old standard of living want easier repayment terms on their loans. The total value of renegotiated loans to date is around 20 billion euro.
The Greek financial system worsened dramatically after the haircut of the face value of Greek government bonds. Banks’ balance sheets noted serious deficiencies when the bonds they hold as assets lost 50% of their value in the PSI process. The reduction of pensions and wages and increased unemployment have put a large number of payers in a very difficult position and they started to experience difficulties or ceased repaying their monthly obligations to financial institutions. By August 2012, the loans "in the red" reached 17.2% or 77 billion euro and one out of every three consumer loans was not serviced. Meanwhile, more than 70 billion euro in deposits have been withdrawn from the country in the last three years since 2009.
"The key to restoring stability is the recapitalization of banks and the increase in deposits. To make this happen, the economic climate in the country needs to change, which will restore the confidence of customers. In addition, the ongoing negotiations with the supervisory Troika should be completed," Zanias expressed his expectations for the improvement of the state of the banking system.
The Greek insurance market, which paid a high price due to the cut of the foreign debt, seems to have fallen into the same hard situation too. It has been estimated that the decline in the turnover of insurance companies in the country will reach 15%, which is twice the loss compared to the results in 2011 when the drop was 7%.
"On behalf of insurance companies, we are step by step making progress in the execution of our duties. We supported the PSI process and fulfilled our national debt," the director of Interamerican George Kotsalos told Naftemporiki. He has explained that insurance companies have been cooperating with the supervisory authority and they are seeking to resolve the problems of auxiliary funds through public-private partnership. "These measures are not sufficient to those interested in our industry - our shareholders, our customers and our investors." Individuals and companies that have entrusted their insurances and private insurances or pensions are concerned about the future of the Greek insurance market because there is no strong support from the state. It is imperative to establish a constructive dialogue with the institutions to provide a solution to specific problems, the expert says.
Like banks, insurance companies suffered heavy losses from the reduction of the face value of Greek government bonds, but the government does not provide financial support for them. At the same time, concerns are growing because the market share of private insurance continues to shrink.
The head of the insurance company Eurolife EFG and chairman of the Pension and Life Insurance Commission within the Association of Private Insurance Companies in Greece, Alexandros Sarrigeorgiou, states that there are three main factors indicating that the insurance market will shrink. The first is the crisis itself and the drastic reduction in citizens’ income. After the wagecuts in the private and public sectors, households are unable to give free money for a life insurance or to a private pension fund. Secondly, the lack of incentives for the development of private insurance, as is the practice in other countries, plays its role too. The third is the lack of confidence in the system of private insurance itself.
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