Greece and its international lenders agreed early morning hours on Tuesday (17.11) the measures needed to unlock the disbursement of a 2-billion-euro sub-tranche and a 10-billion-euro recapitalisation of banks, following lengthy negotiations over a series of days.

“We have reached agreement on everything, including the 48 prior actions” said Finance Minister Euclid Tsakalotos, who at a news conference together with Economy minister Yorgos Stathakis pointed to a key
settlement with creditors on bank home foreclosures, which will protect 60% of debtors with non-performing bank loans. From about 400,000 of 1.2 million home loans that are not being serviced, there will be an absolute protection to around 25% of borrowers from losing their primary residence to auctions, while a further 35% of borrowers will be conditionally protected, as determined by income and asset criteria. According to FinMin officials, the handling of the remaining non-performing loans (NPLs or “red loans”) and their sale to foreign distress funds will be included in a next draft bill in December.

Eurogroup President Jeroen Dijsselbloem and European Commissioner for Economic and Financial Affairs Pierre Moscovici welcomed the “substantial agreement” on all pending matters of the reforms that are included in the first package of the prior actions, as well as on the reforms referring to the financial sector, which are very important for the successful recapitalisation of the banks.

The current set of prior actions was submitted yesterday (17.11) in Parliament in an omnibus bill to be voted on by Thursday and includes the protection of the primary residence from auctions for defaulted loans, changes to the debt settlement payments in 100 tranches with stricter terms so that people who delay payments are penalized, and VAT equivalent measures in lieu of that on private education institutions. Upon the bill ratification, the Euro Working Group is expected release the 2 billion euro sub-tranche loan and unlock the disbursement of the 10 billion euros in recapitalization aid to the country’s four main banks.

The news of the breakthrough also helped Greek bond yields hit their lowestin more than a year and lift the main Greek stock index, which was up 2.4 percent in mid-afternoon trading with banking stocks rising about 10 percent.