The government will formally seek approval from the European Commission later this year to transform the successor entity to the failed co-op bank into an asset management company.
In parliament on Monday, finance ministry official Anthi Chrysostomou-Lapathioti said they will reach out to the EU’s Directorate-General for Competition likely in July.
At the same time, she told MPs, the government is devising a mortgage-to-rent scheme to help out vulnerable borrowers. The scheme’s goal will be to protect primary residences and business premises.
In June 2018 the state-run cooperative bank was forced to sell its operations to Hellenic Bank after its failure to reduce the non-performing loan stock fast enough wiped out its equity.
Kedipes was established as a successor entity to manage the non-performing loans, real estate and other assets amounting to €8.2 billion, that were not part of the transfer to Hellenic Bank.
Among them were non-performing loans of about €7 billion.
The remainder of the co-op’s assets and deposits were transferred to Hellenic Bank. Kedipes will take over €8.3 billion worth of assets of which €6.97 billion in NPLs, €0.5 billion in ‘good’ loans, around €620 million in immovable property, and cash and shares in other companies worth €230 million.
The co-op was also set to pay €139 million to 1,026 workers who opted for the voluntary retirement scheme.
Meantime Kedipes has been incrementally paying back the loan guarantees provided by the state as part of that transaction – the winding down of the cooperative.
Kedipes chairman Lambros Papadopoulos said that since its inception in September 2018, the entity has given back to the state some €1.1 billion.
Regarding the new relief scheme worked on by the government, the finance ministry said it will be similar to the ‘Estia’ plan – which however failed to get a lot of traction – and will concern primary residences and business premises of up to €350,000.
The finance ministry is currently formulating the eligibility criteria.
According to Lapathioti, they expect the scheme to have an impact on government finances, but the extent will depend on the amount that Kedipes pays to acquire the mortgage portfolio and the rent that it will pay out to debtors.
“For vulnerable borrowers, the rent will be paid by the government,” she added.
Under a mortgage-to-rent scheme, intended to help homeowners at risk of losing their property due to mortgage arrears, a person voluntarily surrenders ownership of their home to their lender. An entity buys the home from the lender and becomes the landlord. The borrower no longer owns their home, but will continue living in as a tenant.