EN Official Journal of the European Union CE 65/50

(2004/C 65 E/049)

WRITTEN QUESTION E-0876/03

by Ioannis Marínos (PPE-DE) to the Commission

(21 March 2003)

Subject: Rise in interest rates on loans in Greece

Rumours of a general increase of 2 % on variable interest rates on loans have given rise to deep concern in Greece. The Greek press reports that this situation is the exact opposite of what is happening in the other countries in the euro zone (where falling interest rates is the trend) and that whereas the banks in Greece offer between 1 % and 2 % interest on deposits, their lending rate for credit-card holders is 16 %, giving Greece the highest interest-rate spread in the euro zone. The rise in interest rates on loans has caused despair among consumers who have borrowed to buy a home, believing the government's assurances that ‘interest rates will continue to fall’, something to which the New Democracy has drawn particular attention as well as highlighting the lack of real competition between banks in Greece. As New Democracy's Coordinator of Economic Affairs, Mr Alogoskoufis, has pointed out ‘in the Greek banking system, over half the governors of banks are appointed by the government’. The concern in Greece is that the economy will lead to a general rise in interest rates having a palpable impact on consumers and the pace of economic development. In a public statement on the matter, the Association of Consumers and Borrowers of Greece stated that, according to figures released by the European Central Bank (ECB), average interest rates on consumer credit in Greece are three percentage points higher than in the other countries in the euro zone. The Governor of the Bank of Greece, Mr Garganas, has pointed out that the recently adopted law on additional interest rate charges contains numerous ambiguities and the banks are therefore failing to implement it.

What are the Commission's views on the rise in interest rates on loans in Greece? Why are interest rates in Greece on the increase when at the same time the exact opposite trend can be observed in the other countries in the euro zone? Has the Commission received any information from the Greek authorities concerning the additional interest rate charges, which have spelled financial ruin for so many in Greek business and professional circles?

Answer given by Mr Solbes Mira on behalf of the Commission

(7 May 2003)

Within a context of largely integrated financial markets in the Community, a single currency and single monetary policy, conditions in these markets are increasingly competitive ones. However, individual institutions, whilst being influenced by common factors such as a change in the market borrowing/lending rate, may still decide the conditions applied to their customers according to their own individual strategy, balance sheet and other considerations. In particular, in times of weak economic growth, financial institutions may decide to give more weight to risk considerations than otherwise. Interest rate spreads in some other countries have also gone up recently.

Although there have been from time to time ad-hoc investigations into alleged collusion or co-ordination between institutions concerning conditions applied to customers, no evidence has so far been found of collusion or of an abuse of a dominant position in Greece. The Greek competition authority, the Hellenic Competition Commission, is well placed to monitor competition in the Greek banking market and we will forward the concern expressed to that authority.