Banker: Loan value could be reduced to have lower instalments

A banker proposes as a first to write down loan amounts in order to unfreeze the banking market.
Many bank customers want to keep paying their loan instalments, but they are genuinely unable to do it for pre-crisis amounts so instead of ending up in default, which "impairs the value," the amount of a loan could be reduced, for instance, from 40,000 to 30,000 euros, which would result in a manageable instalment, says Vladimir Kalinov, vice-president of the risk division of Raiffeisen Bank.
This is the first high-level banker to publicly propose a reduction in the value of loans.
Individuals have borrowed 23 billion euros from banks, around 10 billion euros of which are mortgage, real estate loans, and consumer loans used to purchase homes. Since home prices have been cut to the 2006 level, almost all loans granted in the 2007-2008 period should be reduced in order to come up with an updated value of the homes.
"There are customers willing to make the effort to continue to pay a lower instalment and for them we can take into consideration the "write down" option (reducing the book value of a loan). Unfortunately, there are legislation-related difficulties because if this is a move coming from the bank, then the loan value difference is subject to a 16% tax payable both by the bank and the customer. No one is happy to take on this cost and I think something should be done because many banks would opt for write-down if the legislation allowed such operations under acceptable terms," Kalinov told ZF in an interview.