Dimitris Rapidis

city_from_above_web-thumb-largeOn May 11 the Greek government extended for a fourth consecutive time the law protecting primary residences from foreclosure. This refers to a wide category of non-performing loans (NPLs), covering as well medium-size enterprises with gross annual income lower than 50 million euros, occupying up to 250 employees.


This regulation protects 94% of the total NPLs connected to primary residences with objective price up to 140,000 thousand euros. It will last for a transitional 18-month period and will apply to all loans and categories of debtors.

For these cases that are not covered by this regulation, banking institutions should first prepare detailed proposals to the debtors regulating the existing debt, showing understanding to vulnerable groups and respecting the code of ethics underlined in the Procedure of Demands Resolution that has been voted and passed by the Greek Parliament.

In addition to that, for the most vulnerable social groups and households, the respective bill foresees a special financial contribution from the Greek state so that debtors can regularly pay their monthly instalments in due time. Especially for these loans that the banks have granted ownership to non-banking institutions, there is a tight regulation scheme that forces such institutions to use affiliated companies established in Greece, licensed and monitored by the Central Bank of Greece. The aim is to secure transparency, keep their identity accessible to the public, have a clear strategy and present a plan focusing on the restructure of the existing loan so that the debtor can correspond, respect the deal, and pay according to the current financial capacity.

The Institutional Framework

The Greek government has established a broad information and support network addressed to loan holders. 30 centres have been created around the country providing legal, financial, consultative support on issues of better loan and financial management. This initiative is essential and useful especially for these groups that have restricted access to information, working as well as a social policy tool. In this respect, the centres are equipped with a special unit of agents that works to assist in and consult on the handling of debt issues.

Furthermore, a new Secretariat to deal with private debt has been introduced to examine all debt issues, in a case-by-case modus operandi, that will also propose policy recommendations to the respective government’s Council for Managing Private Debt. The Secretariat will work on the following areas:

  • take care of information flow, support loan holders and coordinate the information centres;
  • coordinate the work of the involving public services, such as the relevant Ministries and the independent authority for Consumer’s Protection, and participate in the respective EU bodies;
  • develop and manage the information system dealing with the management of private debt, which entails all necessary details on procedural issues (i.e. submitting requests; programming tools; evaluation process);
  • prepare information and awareness campaigns and trigger collective actions.

Restructure of Business Loans

The Greek government’s mechanism that will deal with extra-judicial settlements for overdebted companies and enterprises is underway. This mechanism will be built in a way to protect and focus on the survival of small-and medium-size enterprises, excluding strategic defaulters. The final aim is to provide these enterprises with the necessary tools to restructure their debt, keep their personnel, and steadily recover from recession and debt management.

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