The worst thing is that every month, the number of those who cannot pay their instalments on the loans is increasing, and this is happening despite the actions taken by the banks or by the borrowers themselves, based on the recently adopted law. This situation affects 750,000 loans.
This exceeds the initial negative outlook for the development even of the mortgage portfolios of the banks, which are considered to be the most stable ones, since one in every ten loans is already not serviced properly, as compared to 3% - 4%, which was the normal level of bad loans in this category before the crisis.
Current estimates of bank employees talk about bad mortgage loans exceeding 15% at the end of 2011, a rate which would have been much greater if it wasn’t for the restructured loans.
With business loans, the bad credits have reached 13-14%, and in the consumer loans they exceeded 25%.
Bankers expect that over the next three years delays in repayment of loans and unpaid loans will further increase. They believe that the first half of 2012 will be the most critical period during which the durability of society against the fiscal measures, increasing unemployment and decreasing wages will be established. Their worst fears are associated with a doubling of bad loans, which will mean 60 billion euro in bad loans. There is particular concern expressed in relation to loans for small and medium-sized companies where assessments are talking about losses that could reach 10 billion euro over the next three years. And vice versa, they define as "manageable" the situation with loans granted to large companies.
In total in 2011 loans amounting to nearly 35 billion euro, out of which the business loans are worth 15 billion euro, have reached the "red" zone.
Banks are already proceeding to massive restructuring of the loans, while applying very strict criteria for the granting of new loans. These new more stringent criteria do not permit lending to most of the prospective borrowers, and even when banks do grant a credit it is for a much smaller amount than the one requested.
As a result of the continued reduction in the rates of granting new loans, at the end of 2011 business loans amounted to a total of 120 billion euro, mortgage loans - 78 billion euro and consumer ones - 32.9 billion euro.
Example 1
For a mortgage loan of 150,000 euro, with a maturity period of 25 years and a 4% interest rate, the monthly payment today is 791 euro. If banks implement the plan to alleviate the situation of the borrowers, the same loan would be serviced with a monthly fee of 554 euro, and the instalment may be further reduced if at the same time the repayment period is extended to 30 or 35 years.
Example 2
"Cutting" by 30% in the case of a business loan of 1 million euro will bring immediate benefit to the company amounting to 300,000 euro of the total allocation, which will reduce the monthly payments by the appropriate rate. For example, if the loan was granted with a maturity period of 15 years, the monthly payment would be 8,988 euro, and after the principal has been cut, it will decrease to 6,290 euro.
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