New pressures on banks, and especially on debt management companies, will arise due to the abstention of notaries in June. This abstention may derail the business plans of NPLs’ recoveries and cause problems with the Hercules state guarantee program.
The abstention of notaries comes after a series of significant problems in the system, the main one being the long delay in the drafting of classification tables by notaries, without which creditors cannot collect the money from property auctions. According to Business Daily’s sources, more than 150 million euros from auctions that have taken place in the last 3 years cannot be collected by debt management companies and banks, as the drafting of the classification tables has not taken place.
According to the law, the drafting of the table must be done within 3 months after the completion of the auction, however, this is not the case and there are cases from auctions held in 2018 and 2019 where creditors are still waiting for the issuance of the classification table to collect funds.
According to bank officials, June has an increased weight in business plans as the planned auctions for next month are three times more than the average of the first quarter.
The abstention of notaries will have larger and multiple consequences: There will be no auctions, no ranking tables will be drawn up and it will not be possible to make consensual real estate sales within the framework of regulations. Thus, the business plans of management companies will be overturned.
The risk of new problems arise after delays in 2020 and 2021, when due to the pandemic the courts did not function for a long time. Consequently, servicers could not meet goals set in business plans.
As bank executives point out to Business Daily, the new freeze on auctions, combined with the 150 million euros that creditors cannot collect may lead to servicers not being able to pay their obligations for securitizations to the state, raising the risk of serious fiscal consequences for the government. Eurostat has also raised the issue with Greece.
Through the Hercules Scheme, the government has offered state guarantees totalling €23 billion euros to investors who acquired securitizations of non-performing loans, as part of the clean-up of bank balance sheets.
According to bank sources, if June is lost, the whole summer will be lost, as in August the courts are essentially closed and the banks will not be able to hold auctions, consensual real estate sales or legal actions to plan new auctions.
Impact on real estate
The walk out from notaries will lead to a freeze on the purchase and sale of real estate, as transfers will not be possible. Thus, at a time when the economy and businesses are under pressure due to the new crisis triggered by the Russian invasion of Ukraine, the real estate market, one of the most vibrant sectors of the Greek economy, which attracts large foreign investments, will be under pressure for several weeks.
Notaries are protesting to a decision from the Land Registry to make the electronic submission of transferable deeds and contracts mandatory from 30 May. Notaries argue that this is not possible due to problems and ask that the parties have the option of choosing an electronic or physical presence for the registration.