State aid: Commission approves Greek Primary Residence Protection Scheme to support households at risk of losing their home due to difficulties in mortgage repayments

The European Commission has approved under EU State aid rules the Greek Primary Residence Protection Scheme to support households that have encountered difficulties in repaying mortgage loans and risk losing their primary residence. The scheme, which has an annual budget of around € 132 million, sets strict eligibility criteria in terms of the value of the primary residence and income of the borrower to ensure it is targeted at those in need. Eligible borrowers will receive a grant corresponding to 20% to 50% of their monthly loan payment depending on their income, provided that: (i) their loans are secured against their primary residence; and (ii) they resume paying the residual part of their monthly payment. If the borrower stops servicing its loan, it is foreseen that the bank can initiate the foreclosure of the property. All banks will have to restructure the loans of eligible borrowers along the same requirements defined by the State. The Commission concluded that, with respect to individuals, including those performing an economic activity, the measure does not involve any State aid. With respect to the banks that issued the loans, the Commission found that the scheme will provide an indirect advantage because it increases the amount of repayment the banks are likely to receive from the non-performing loans. At the same time, the Commission’s assessment showed that this indirect aid would not create undue distortions of competition because the aid is limited to what is necessary to achieve its objective of ensuring that borrowers do not lose the house in which they live. Moreover, since all banks established in Greece will participate in the scheme, it is non-discriminatory among them. The Commission has therefore concluded that the scheme is well-targeted and limited in time and scope as required by EU rules. Finally, the scheme is expected to contribute to reduce the high burden of non-performing loans in the Greek banking sector.