The Prime Minister’s announcement about banks where he calculated the bill for the measures announced from the floor of parliament by Kyriakos Mitsotakis at €320 million.

This fact leads credit institutions to reconsider their estimates of their results, as they will have to take the relevant forecasts.

And as reliable banking sources say, banks will act accordingly according to their schedule. That is, if they have to transact next year they may take some or all of the provisions required to meet the cost of the announcements from the current year, or they may break the provisions into more than one year depending on the disbursements. This issue mainly concerns the €200 million that credit institutions are being asked to contribute to the Real Estate Agency and the Marietta Giannakou program for school renovations

Banks are entering a review of their business plans. It is estimated that the total cost of the measures announced by the Prime Minister is equivalent to 8% of 2024 earnings, but it should be distinguished that the contribution to the Yannakou program and the Property Agency will not be in perpetuity, which is the case with the legislative haircut on commissions.

Banks were estimating their earnings at over 4 billion euros in 2024 while they achieved 3.5 billion euros in 9 months. It remains to be seen whether forecasting will affect this year’s profits or start next year. Of course, it should be noted that each bank has a different customer base which shapes a different cost.

The Measures

A first specification of the measures was attempted yesterday by the Minister of State, Akis Skertosos, in a post on Linkedin

“The 10 measures announced a short while ago (Sunday night) by the Prime Minister to protect consumers, intensify competition in the banking system, and increase the supply of real estate are as follows:

1. Nil charge for payment of bills and debts to the state, social security funds, local authorities, energy, water, telecommunications, and insurance companies, via digital networks (web-banking/mobile banking) (from 0.6 euros, which currently costs 0.6 euros in most cases).

2. Reduction of fees for transferring money between banks: maximum charge of 0.5 euros for sending money (outgoing remittance) and 0.5 euros for receiving money (incoming remittance), for amounts up to 5,000 euros per remittance, for individuals and self-employed persons, between banks. It concerns both simple transfers and direct credit transfers (SEPA). This corresponds to a reduction in the cost of these fees of between 50% and 80% depending on the bank and the type of transfer (from 1 to 2.5 euros, which is what it currently costs).

3. No charge for cash withdrawals from an ATM of another bank other than the one where the account is held in remote and island areas where there is only one bank’s ATM. In addition, nationwide, zero charge for account or card balance inquiries at ATMs of other banks (from around €0.2 currently in force).

4. 50% reduction in card transaction costs for small retail purchases up to EUR 20 (from EUR 10 recently introduced).

5. No charge for loading prepaid cards for a loading amount of up to 100 euros (from approximately 1 euro currently in force

6. Facilitate the use of IRIS by establishing discrete limits to allow for direct and free transfers of money between individuals up to EUR 500 per day, in addition to EUR 500 per day for direct payments to self-employed/individual businesses

7. Doubling of Taxes for vacant residential properties owned by banks and servicers to be channeled into the market.

8. Enhancing competition in the financial system and access to credit by removing restrictions on financing by Credit Providers.

9. Transparency and the information framework for citizens are strengthened, who will now be able to compare interest rates on deposits and credit, as well as charges associated with payment accounts. This information will be available on the website of the CBE.

10. Voluntary Contribution by Systemic Banks: Systemic banks will provide an amount of 100 million, augmenting the available resources of the Marietta Giannakou Programme for the reconstruction of even more schools. The aim is for the economy to grow dynamically and for this growth to be shared equitably among all citizens.
The aim is for the economy to grow dynamically and for this growth to be shared equitably among all citizens.
The aim is for the economy to grow dynamically and for this growth to be shared equitably among all citizens.

The above measures also aim to enhance competition between banks for the benefit of their customers. The measures will be further specified today at 11 am by the Minister of Economy and Finance, Kostis Hatzidakis.

How credit institutions will deal with the issue

The only certainty is that the banks will seek alternative sources of revenue while speeding up procedures for the sale of their properties. Note that this is also the demand of their supervisor, the SSM. If the government gives them what they are asking for in terms of settlements of unauthorized properties, i.e., to proceed with sales without settlements, they will quickly throw as many properties as they can onto the market for sale. If not, they may proceed with transactions involving securitization of real estate portfolios, and very quickly.

Cost analysis

This issue mainly concerns the disbursements for the Real Estate Agency and also for the Yiannakou program. These two funds of 100 million each will be paid only by the systemic banks.

Funds of EUR 100 million

As far as popular payments (PPC, OTE, municipalities, water supply, etc.) are concerned, which correspond to commissions that are zeroed out and the half-euro cap on remittances up to 5,000 euros, the total, according to rough calculations by bankers, amounts to about 100 million euros.

Taxes of €20 million

To this will be added the doubling of ENFIA which may in total be around 40 million euros, but for residential properties, it amounts to around 20 million euros.

Meanwhile, it is expected to become clear whether servicers and banks will eventually get what they have asked for, namely not having to legalise properties to put them on the market.

Authoritative sources tell newmoney that ultimately this proposal has a split chance of being accepted.