ATHENS, Dec 16 (Reuters) – Greece will present an out-of-court settlement soon for billions of euros in Swiss franc-denominated mortgages to try to end a long-running dispute over soaring repayment costs caused by currency fluctuations, two sources told Reuters on Tuesday.
More than 50,000 Greeks took out mortgages in Swiss francs in the mid-2000s, attracted by lower interest rates.
They are now repaying them in far bigger instalments after the Swiss franc soared against the euro. Swiss franc mortgages were also popular in parts of central Europe.
Many Greek borrowers took their banks to court, hoping for compensation.
The final decisions are still pending.
“The proposed settlement will be announced in coming days and will include a haircut between 15% and 50% for the remaining amount of the loans,” said a senior government official with knowledge of the issue, who did not wish to be named.
The Greek government had planned to announce a settlement in the summer but due to complex technical issues it was only finalised in recent weeks.
It will provide a favourable conversion of the remaining loans from Swiss francs to euros, with a discount ranging between 15% to 50% on the exchange rate depending on the borrowers’ income.
The combined cost for the Greek banks will be between 400 million and 600 million euros ($470.40 million-$706.56 million), depending on how many loans they granted and the borrowers’ participation, the government official and another official in the banking sector said, without giving more details.
The plan will be on a voluntary basis.
Currently, out of about 37,000 remaining Swiss franc loans, 20,000 are with the banks while 17,000 are bad loans in the hands of credit management companies or have been securitised through the so-called Hercules bad loan-reduction scheme, according to Finance Ministry data.
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(Reporting by Lefteris Papadimas; Editing by Susan Fenton)
