A man on the island of Crete has received a legal notice from a London-based company to settle a home loan he took out from Piraeus Bank within five days or face legal action, a Greek press report (link in Greek) said on Sunday.
The legal notice, delivered by a local judicial bailiff in the island town of Chania, stated that the company, Estia Mortgage Finance PLC, acting on behalf of Piraeus Bank, was demanding the man to pay €128,701- without interest and other expenses- within the deadline or face legal consequences which could lead to the confiscation of his home. Is Piraeus Bank connected to Estia Mortgage Finance PLC?
Has Piraeus sold to Estia part of its loan book?
According to previous Piraeus Bank’s financial statements, Estia Mortgage Finance PLC falls under the category of “investments in subsidiaries and associate companies”. It is an SPE (Special Purpose Entity) for securitization of mortgage loans, domiciled in United Kingdom. The company has since been consolidated as a special purpose entity in the bank’s end of 2013 statement.
The unnamed man was forced to shut down his business due to the financial crisis and was unable to pay the loan installments to Piraeus Bank.
Piraeus Bank has the highest proportion of bad loans, accounting for 38.5% of total loans, ahead of National Bank of Greece on 23.2%.
On Sunday, the bank along with Alpha Bank, were given a clean bill of health after passing a stress test by the European Banking Authority. Eurobank Ergasias and the National Bank of Greece failed the test.
It is the first time – according to the report in the cretan radio station – a resident of the island has received a legal notice from a foreign company over an unpaid home loan.
A copy of the document was presented on a local radio show by Independent Greeks lawmaker Michalis Alexakis.
Greek banks are struggling to cope with almost €80 million in non-performing loans, according to the Growth and Competitiveness Minister Nikos Dendias.
The problem of bad debts of households and companies – estimated at 90% of GDP- is threatening to dash any hope the government has of steering Greece out of recession.
The case on Crete is occurring at a time when the government is preparing legislation to loosen the noose around the necks of more than 160,000 businesses (link in Greek) allowing for debt settlements, effectively reducing amounts owed in taxes, bank loans and pension funds.