Banks offering ‘insufficient’ support over interest rate hikes

Commercial banks have so far offered insufficient support amid interest rate hikes, the House commerce committee heard on Tuesday.

During a session focusing on the issues caused by the European Central Bank’s decision to raise interest rates in a bid to fight inflation, banks presented the measures they have undertaken to alleviate the pressure faced by borrowers.

“The measures that have been taken today are insufficient, they are measures that essentially leave all borrowers vulnerable,” committee chair Kyriakos Hadjiyiannis said.

He also spoke of “silence” on the part of the central bank and the finance ministry, expressing concerns about an influx of new non-performing loans.

Referring to the measures presented by the banks, he said that some smaller banks have absorbed part of the growing lending.

The public is on its knees, households and businesses, big or small, Akel deputy Costas Costa said.

“People can’t take it anymore, and this will, with mathematical precision, create new NPLs,” he added.

He also remarked that the committee has not heard anything from the finance ministry’s representative about the proposals to enforce excess profits tax, and whether the government will work out a targeted mortgage subsidy scheme for the middle-income classes.

Similarly, Dipa MP Michalis Yiakoumis expressed his dissatisfaction with the actions and intents of the banks.

“Today we are talking about pure exploitation of the situation by the banks, which announce profits of around 500 million every six months and expect us to be mere spectators as they continue to not reduce the lending rates,” he said.

There are two solutions, Greens deputy Stavros Papadouris said, “for the state to subsidise vulnerable households in a targeted way and for the banks to absorb part of the borrowing costs, since they will still have increased profits”.

Director of the banks association Michalis Kronides told the committee that that after meeting with the finance minister in May, the banks proceeded with their own measures, which involve absorbing part of the costs or returning some money in a loan perimeter of up to €350,000.

Actions are being taken within the framework allowed by the supervisory authority, he added, saying he hopes some changes will be made in the next weeks.

Households and businesses are over-indebted, he said, so with deposits and high leverage there is a difficulty with new lending.

General director of the association for the protection of bank borrowers Jenny Papacharalambous said the association receives complaints from borrowers that while their instalments are increasing, their earnings are not and they cannot service their loans.

“They go to their banks and receive no help, leading to a dead end,” she said, adding that banks and credit institutions put up a wall.

“We need drastic and targeted measures, what we heard today is not enough,” she added.