T. Panousis sees mergers to create stronger credit servicing firms

Tassos  Panousis, CEO of Eurobank FPS and President of the Union of Credit Servicing Firms  (CSFs) foresees mergers among domestic Loan Management Companies to create stronger players.

Speaking at the SmithNovak conference, Mr. Panousis stressed that a decline in recoveries caused by the COVID-19 crisis automatically means less revenues for credit servicing firms. Consequently, this will make necessary the review of operating expenses and cost rationalization. This can accelerate the creation of mergers in the industry and can lead to the creation of stronger schemes, especially among smaller players.

The effects of COVID-19

Mr. Panousis emphasized that “an important issue that concerns us all in this period is how the pandemic will affect CSFs and what changes it will bring in the operating model of loan servicers in the post-COVID-19 era. The most important challenge we are facing is the management of the large volume installment suspensions in bank portfolios”.
It is a fact, he added, “that all servicers have faced challenges with loan recoveries, especially in the second half of March and in April. However, stabilization is likely to be achieved in May, signaling a return to normalcy at the level of payments”.

Loan portfolios mostly affected were constituted of unsecured credits mainly to consumers and sole proprietors, while the situation is better in mortgages and covered business loans. The later gives a positive message about the securitizations that have taken place or scheduled.

The business plans of Funds,  as well as NPE’s targets of Banks, were derailed due to the lockdown.  As Mr. Panousis pointed out the fact that the courts ceased to operate, caused more delays in the already time-consuming court settlements. The enforcement procedure is affected negatively and foreclosures are pushed further back.

Positive changes in the institutional framework

Mr. Panousis, addressing the SmithNovak conference, referred to the planned institutional framework changes.  He emphasized 4 points:

  1.  The new insolvency law that is expected to be announced in June and implemented as of January 2021.  The new law aims at improving the insolvency procedure for both households and enterprises.
  2. Changes at the Law No.3869, based on which all requests that have not reached the courts yet, will enter into a new platform with fresh requirement criteria.  In this manner, the procedure of who is qualified by law to enter the scheme will be facilitated.  Furthermore, housing NPLs will be straightened out and most importantly, bad payers will be judged with better criteria.

3. Law No.4605 for the protection of primary residence.  This law gives a “last opportunity” for primary residence protection until July.

4.  The subsidy program for housing loans that will be introduced by the government on July 1st.  This program is expected to  benefit more than 250 thousand borrowers (i.e. 13 billion in loans)

If all the above are implemented, Mr. Panousis said that he is confident that the goal of banks to lower NPEs will be reached, the secondary loan market will be streamlined and targets regarding debt securitizations through the “Hercules” program will be achieved.   He further expects a gradual improvement in economic indicators in the post-COVID-19 reorganization era.

The President of the Union of Credit Servicing Firms also referred to the way servicing firms reacted in Greece during the crisis.  He said that their primary concern was to implement all protection measures to safeguard the health of their employees and also to undergo all necessary technological changes in order to increase home working and efficiency.

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