The International Monetary Fund has identified shortcomings in the Bank of Greece's supervision of the country's smaller banks, raising concerns over risk management, corporate governance and enforcement practices in a segment of the financial system that falls outside direct European Central Bank oversight.
The findings were published in a report prepared under the IMF's Financial Sector Assessment Program (FSAP), which reviewed the Bank of Greece's supervision of several non-systemic lenders, including Credia Bank, Optima Bank, Aegean Baltic Bank and Viva Bank, as well as a number of regional cooperative banks.
The assessment was conducted by Toby Fiennes, a veteran banking supervisor who previously held senior positions at the U.K.'s Financial Services Authority and later at the Prudential Regulation Authority of the Bank of England.
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While Greece's largest banks are supervised directly by the European Central Bank under the eurozone's Single Supervisory Mechanism, responsibility for overseeing smaller institutions remains with national authorities. The IMF's review suggests that aspects of that framework require strengthening.
Among the most significant concerns identified is the treatment of concentration risk—the danger that excessive exposure to a small number of borrowers could leave banks vulnerable to financial distress. The IMF noted that Greek banking regulations do not currently require boards of directors to formally approve and assume responsibility for concentration-risk levels, despite large borrower exposures being a recognized source of risk within the country's banking sector.
The Fund described the absence of such a requirement as a material supervisory weakness and recommended that the Bank of Greece introduce rules obliging bank boards to take explicit responsibility for approving and monitoring these exposures.
The report also highlights deficiencies in the oversight of related-party transactions. According to the IMF, Greece's regulatory framework lacks aggregate limits on lending and other exposures to related parties, while the legal definition of related parties remains narrower than international standards established by the Basel Committee on Banking Supervision.
The IMF recommended broadening the definition to include affiliated companies, senior executives and their close relatives, and introducing a cap on total related-party exposures equal to 25% of a bank's Common Equity Tier 1 capital.
Corporate governance emerged as another area of concern. The report argues that the Bank of Greece should adopt a more proactive supervisory approach and push banks to exceed minimum regulatory requirements rather than merely comply with them.
The Fund pointed in particular to the limited effectiveness of independent non-executive directors at some institutions. Many of the weaknesses identified during the review, he wrote, stem from insufficient challenge of management decisions and a lack of rigorous oversight by independent board members.
Although Greece introduced new governance rules in 2025 requiring banks to maintain a minimum number of independent non-executive directors, the IMF cautioned that numerical compliance alone is unlikely to ensure effective oversight. Instead, the report calls for greater emphasis on the experience, expertise and genuine independence of board members.
The IMF also delivered a critical assessment of the BoG's sanctions regime, arguing that enforcement measures should be more closely aligned with the severity of regulatory breaches and applied in a manner that creates a stronger deterrent effect. According to the report, the current framework does not always operate with sufficient consistency or effectiveness, raising questions about the timely handling of supervisory violations. The Fund recommended a comprehensive overhaul of the sanction’s escalation process, including the development of a clearer and more structured sanctions matrix to ensure faster, more predictable and more effective enforcement actions.
