Red loans to banks and servicers were reduced by €25 billion in the third quarter of last year compared to 2019, from €92 billion to €67 billion.

The figures have been recorded by the Ministry of Economy and Finance, whose officials say that this significant reduction in private debt is one of the reasons for the upgrades of the Greek economy by the rating agencies.

According to the ministry's agents, a series of legislative initiatives (Law 5072/2023 and Law 5113/2024) that significantly improved the functioning of the out-of-court mechanism contributed to the reduction of "red" loans. To date, the total number of successful settlements stands at 30,515, with the total value of settled debts amounting to EUR 10.01 billion. And it is noteworthy that settlements in the out-of-court mechanism increased by 81% between 2023 and 2024. While, the new initiatives announced by the Minister of National Economy and Finance Costis Hatzidakis (e.g. doubling the income and asset criteria threshold in the mandatory out-of-court mechanism) greatly expand the scope of the out-of-court mechanism and the level of protection for tens of thousands of debtors.

The relevant officials of the Ministry of Finance give an indication of what is currently in force:

• Automatic and mandatory acceptance by banks and the state of the debt restructuring proposal of vulnerable debtors.
• Inclusion of persons with a disability rate of over 67% in the category of vulnerable debtors with increased limits on income and property criteria.
• A further higher "haircut" of 28% on the debt.
• In particular, with the presumed consent of creditors to the out-of-court application of the vulnerable, the protection of vulnerable borrowers has been strengthened, with 2,673 vulnerable households benefiting from debt arrangements.
• Fixed interest rate of 3% for 3 years for all arrangements (state, banks, servicers).
• Possibility for legal entities that have been dissolved or wound up to settle their debts to the State by the persons co-responsible for the debts.
• Ability to make an advance payment of up to 10% for debtors who have been notified of an auction program, with the exception of vulnerable debtors for whom a vulnerable debtor certificate has been issued (where no advance payment can be requested).
• The possibility of debt recapture to include debts to the state that were established in the interim period if the granting of a restructuring proposal is delayed for any reason.

It should also be noted that through the Heracles program, banks have achieved a remarkable reduction of NPLs in their portfolios. In the third quarter of 2024, the rate reached 4.6% (in 2019 the rate was 40.6%).

It is also recalled that the new measures announced by the minister are as follows:

• Increasing the income and asset thresholds in order to qualify a debtor as eligible under the mandatory acceptance of the out-of-court mechanism by creditors. Under the introduced regulation, the criteria for designating a borrower as eligible are doubled in order to make the consent of all creditors mandatory for the debtor to join the out-of-court mechanism. The doubling of these thresholds is subject to the condition that the debtor has a ceiling of already non-performing bank debts (i.e., to banks or servicers) of EUR 300,000.
• Obligation for the creditor to have submitted a written proposal for arrangement to the debtor at least 3 months prior to the auction.
• Discharge of a debtor for whom bankruptcy proceedings are not opened but who is registered in the Solvency Register.
• Extension of deadlines to allow a vulnerable debtor to enter the interim program.
• Extension of the possibility to settle loans guaranteed by the state through the resolution procedure.
• A permanent mechanism for compensation of "ASPIS PRONOIA" claimants is created; issues of compensation to beneficiaries of life insurance claims are resolved.

Source: Αthens News Agency