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New Democracy and Pasok: the coalition of the bankrupt

Bulk of governing parties' €270m bank debts are non-performing, EU commissioner confirms

The confirmation that the bulk of the €270m debt owed by New Democracy and Pasok to the banks is non-performing means they are 'officially bankrupt', says liberal MEP Theodoros Skylakakis

The parties of Prime Minister Antonis Samaras (L) and Foreign Minister Evangelos Venizelos are unable to meet repayments on the €270m they owe to the banks. (Photo: Reuters) The parties of Prime Minister Antonis Samaras (L) and Foreign Minister Evangelos Venizelos are unable to meet repayments on the €270m they owe to the banks. (Photo: Reuters) Since January 2013, the country's governing parties – coalition partners New Democracy and Pasok – have failed to make loan repayments on the bulk of the massive €270m they owe to the banks, the European Commission has confirmed.

Replying to a written question from Greek liberal MEP Theodoros Skylakakis, European commissioner for competition, Joaquín Almunia, confirmed that the parties have not been provided with any new loans since January 2013, when outside inspectors were appointed to verify "proper governance and the use of commercial criteria in key policy decisions" at the National Bank, Piraeus Bank, Alpha Bank and Eurobank.

"This includes also monitoring the process of new lending and restructuring of existing loans of the connected borrowers including political parties," the commissioner said in his reply, dated February 7.

"Based on the available information no new loan to a political party has been granted since January 2013. Three of the four monitored banks hold loans to the political parties described in your question. The vast majority of these loans are non-performing, as they were already in January 2013."

Almunia's answer, Skylakakis said, showed that the two parties "are unable to service their debts". 

"The official bankruptcy of both parties, which has been hidden from the Greek people for a long time, will result in the loss of hundreds of millions of euros for taxpayers, particularly as concerns the state banks (most of the loans were given by ATEbank)."

Skylakakis, a former member of Dora Bakoyannis' Democratic Alliance party and who now leads the small Drasi party, began raising the question of New Democracy's and Pasok's loans in 2011. He questioned whether the parties were receiving preferential treatment when it came to loans, particularly after up to 90% of the banks came under state control following the recapitalisation process.

Last year, Skylakakis revealed that at a time when the banks were unable to provide mortgages and other types of loans, the two coalition parties received an additional €30m in loans. 

The bulk of the non-performing loans were with the former ATEbank, which lend the parties a total of €198m. The only guarantee the parties offered was the future payment of state subsidies 

In August 2012, the sound part of ATEbank – meaning the performing loans and securities portfolio, as well as the full amount of all the bank’s deposits – was handed over for free to Piraeus Bank.

The unhealthy part – the non-performing loans – was burdened on the taxpayer in the form of a transfer to the Hellenic Financial Stability Fund, a special facility funded by the troika to support the banking system.

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