Seven «weapons» in the battle to defuse the bomb of «red» private debt, which exceeds €247 billion, are being prepared for deployment this year by the government, as part of new defenses being erected to address the crisis. According to the «blue file» of the Ministry of National Economy and Finance, two of these measures – the Central Credit Registry and the Early Warning Mechanism for Debtors – have already been implemented, while five others are set to be rolled out by the end of the year, aimed at preventing the risk of creating new overdue debts.
Thus, according to government planning, the entire weight of regulations and policy interventions is shifting toward preventing the creation of new private debt, through early detection of financial difficulties, improving the quality and availability of data for credit risk assessment, as well as gradually expanding alternative sources of financing for the economy beyond financial institutions, while simultaneously strengthening the supervisory framework and the role of competent authorities.
It should be noted that the nominal value of «red» loans managed by servicers amounts to €79.5 billion. Of these, €27.6 billion concerns business loans, €25.2 billion housing loans, €15.8 billion consumer loans, and €10.5 billion loans to freelancers, farmers, and sole proprietorships. Additionally, €5-6 billion in non-performing loans remain in banks’ portfolios, while overdue debts to the Tax Authority amount to €111.7 billion and to insurance funds €50.6 billion.
With financial support from the Recovery and Resilience Fund (RRF), which covers the majority of actions, the government is proceeding with the following interventions:
1. Development of a Credit Assessment Information System, which will include a central database, as well as development of a creditworthiness assessment system for individuals and legal entities regarding their debts to the State.
2. Implementation of the National Private Debt Management Strategy, with the preparation of 11 studies that are part of the National Strategy projects, as well as the creation of an electronic platform for non-performing loan transactions.
3. Development of a Private Debt Monitoring Registry, within which an electronic database (central repository) will operate through which data will be collected from all public and private credit institutions, as well as from any other reliable source regarding existing debt, in order to effectively support the design and implementation of private debt management policies.
4. Improving the implementation of the debt settlement framework and providing a second chance through upgrading electronic platforms to support the early warning mechanism and the out-of-court debt settlement mechanism for individuals and legal entities. The project includes training services for professional advisors and employees of EDIEH services, as well as guidance services from advisors to individual entrepreneurs and legal entities.
5. Central Credit Registry: Recently put into operation by the Bank of Greece, recording all outstanding debts of individuals and businesses to the financial system — banks, servicers, credit companies, etc. Its key feature is that it provides information to any interested party (individual or legal entity) regarding the status of their debts, provided there is explicit consent from the person to whom they relate. Consequently, third parties (e.g., banks or suppliers) cannot gain insight into another person’s credit profile without their consent. The registry does not record settled debts, nor debts below €2,000 for individuals and €5,000 for legal entities.
6. Establishment of a Real Estate Acquisition and Leasing Entity, as part of efforts to manage and restructure the debts of 70,000 over-indebted households. The Entity will undertake the acquisition and re-leasing of the primary residence of vulnerable debtors, with the possibility of transferring it back to the debtor after the lease period expires, provided the debtor’s financial rehabilitation. According to existing planning, the goal is for the Entity to become operational within the first half of 2026, with the process now entering its final phase, as binding offers from candidate investors (Bain Capital Credit, Christofferson, Robb & Co, LLC, Fortress Credit Corp., Resolute Cepal Greece S.A.) must be submitted by February 26. The Entity represents the last – and critical – piece of the puzzle missing from the 2020 bankruptcy law. It was designed as a mechanism to provide a «second chance» to vulnerable borrowers facing serious financial problems, so they don’t lose their primary residence. A central feature of the institution is ensuring beneficiaries remain in their homes, even in cases of forced execution. Through the «sale and lease back» model, the property is acquired by the Entity and then re-leased to the former owner, who retains the right to live in it. In practice, residence is secured for 12 years with affordable rent while providing the possibility of repurchasing the property, provided the borrower manages to recover financially.
7. Early Warning Mechanism for Debtors (MEPO): This is a digital service of gov.gr that allows individuals and businesses to assess the risk of inability to repay their debts. Through the minfin.gov.gr platform, debtors are classified into risk levels (low-medium-high) and, if needed, receive free advisory services.
