The Credit and Insurance Matters Committee of the Bank of Greece on Monday approved a code of ethics aimed at offering solutions to deal with nonperforming loans, also known as “red” loans.

The list of measures comes at a time when most of Greece’s commercial banks are trying to deal with a mass of “red” loans. The strategies are similar to those applied in other countries.

Short-term solutions for loan restructuring:
* Interest rates applied only during short periods
* Reduced amortization (charging or writing off) instalments
* A grace period
* Postponement of payments
* Handling of overdue balance
* Capitalization delays

Long-term solutions for loan restructuring:
* Fixed interest rate reduction or decreases to the conventional market
* Changing the release date eg. from floating to fixed
* An extension to the duration of loans
* The separation of mortgage loans into viable loans with collatorals and loan balances that may not be counted until a subsequent interest payment date and the changes of mortgages into rental contracts through which former owners become tenants in exchange for rental fees
* Exchange of loan with a smaller loan amount in some circumstances

Currently, nonperforming loans are valued at 75 billion euros, meaning that 35% of loans are not being serviced. This is causing cash flow problems as well as problems to businesses that are struggling to keep afloat.