Many of Portugal’s banks already have received taxpayers’ cash to recapitalise, or they have been flooded with cash prior to being sold off at a loss by the State, but when the tables are turned, bankers have been behaving true to form.
Last year 132,000 families in Portugal were unable to pay their full monthly mortgage so, encouraged by the government’s assurance that the banks are being more customer-focused over arrears problems, many asked for some financial and contractual leeway in order to keep the roof over their family’s heads.
Some 85,000 customers reached some form of agreement with their lenders, but only five thousand of those actually were able successfully to renegotiate their repayments to an affordable level.
The main problem has been the continuing inflexibility of Portugal’s financial institutions which is shown in black and white in the Bank of Portugal’s latest report.
According to the BoP’s 2015 Behavioral Monitoring Report, about 132,000 Portuguese families told their banks they were in trouble and could not pay their full mortgage instalments.
Unsympathetic high street lenders swiftly triggered Extrajudicial Process Failure Situations (PERSI), a mechanism created to facilitate the payment of loans to banks which speeds up evictions by avoiding tha banks having to go to court to have debts legally enforced.
Of the 132,000 Portuguese families applying for some help, only 85 000 were able to reach an agreement with their lenders: but 80,000 such ‘agreements’ involved only paying banks the problem arrears on top of unaltered monthly sums, leaving just 5,000 customers able successfully to renegotiate their mortgages to lower their monthly repayments.
Of the 700,000 consumer credit and mortgage contracts opened last year, more than half came to a premature and sticky end for customers with many banks continuing to foreclose wherever they saw a glimmer of equity or spotted other assets that could be seized and sold off.
Banks say they act in the best interests of their shareholders and the supra-governmental position the nation’s lenders have attained means they can foreclose and sell off property at the hint of an arrears situation.
If one of Portugal's banks collapses, and many have, they are rescued by the State, aka the taxpayer "to protect the integrity of the financial system" according to the government and the Bank of Portugal governor.
The new laws that protect a householder from being kicked out of a main residence due to debt, covers only debts to the State, not debts owed to the banks which can carry on saying one thing and doing another as there is nobody powerful enough to stop them.
