Banks dramatically reduced the mountain of nonperforming loans that once threatened their stability, clearing the way for stronger balance sheets and a return to more conventional lending.
But behind that success lies a more complicated reality: Much of the bad debt didn’t disappear. It changed hands.
Tens of billions of euros in troubled loans were removed from bank balance sheets through sales and securitizations, with investment funds acquiring the exposures and specialized loan-servicing companies taking over their management. The transactions allowed Greek banks to rapidly shed nonperforming assets.
For millions of borrowers and guarantors, however, the underlying obligations remained. In many cases, those debts have yet to reach a durable and final resolution.
The strategy adopted toward the end of the last decade, in coordination with Greece’s European creditors and institutions, placed a premium on quickly restoring the health of the banking system. Large portfolios of distressed loans were transferred out of banks, while servicing companies assumed responsibility for collections, restructurings and recoveries.
Today, servicers manage debts linked to more than 2.2 million borrowers, including individuals and businesses.
The numbers illustrate the scale of the unfinished business. At the end of 2025, loans under management totaled roughly €92 billion, according to aggregate data from the Bank of Greece. Of that amount, around €82 billion consisted of loans that had been sold or securitized, while approximately €10 billion remained on bank balance sheets.
That divide highlights the central paradox of Greece’s bad-loan cleanup. Banks succeeded in sharply reducing their own stock of nonperforming exposures. The private debt behind those loans, however, wasn’t erased when the claims were transferred.
Instead, much of it migrated outside the traditional banking system, creating a vast parallel market for distressed debt.
An estimated €75 billion in troubled exposures, associated with nearly 1.5 million borrowers and guarantors, either remain without a substantive restructuring or have fallen back into distress after an earlier arrangement. The scale sits uneasily alongside the broader narrative that Greece has definitively moved beyond its nonperforming-loan crisis.
Restructuring activity has accelerated. Between 2020 and 2025, an estimated 750,000 loans with a combined value of about €40 billion were restructured. Yet measured against the overall stock of distressed debt, the figures suggest that the cleanup still has a long way to go.
Loans worth roughly €3 billion are estimated to have already met many of the conditions needed to become eligible for a potential return to bank balance sheets. Over a five-year horizon, the pool of rehabilitated loans could grow to between €10 billion and €15 billion.
Even then, there is no guarantee banks will buy them back.
Several longstanding weaknesses continue to slow progress. Greece’s judicial system remains cumbersome, enforcement procedures can take years, and creditors and borrowers frequently struggle to agree on repayment terms that are sustainable over the long run.
For borrowers, a restructuring works only if they can continue making payments years after the agreement is signed. Otherwise, the deal merely postpones the next default.
Loan servicers say they expect the process to accelerate over the next three years, helped by improvements to Greece’s out-of-court debt-resolution mechanism and changes to civil-procedure rules.
The challenge, however, isn’t simply to produce more restructurings. It is to ensure that those agreements are economically viable and don’t send the same borrowers back into default several years later.
Currently, about 80% of recoveries come through restructurings and repayments, while roughly 20% are generated through auctions and asset liquidations. The industry wants to shift that ratio closer to 90%-10%, reducing its reliance on forced enforcement.
Getting there will require more than an increase in the number of agreements signed. It will require deals that borrowers can actually honor.
Servicers are also turning to artificial intelligence. Companies are investing in data-analysis tools designed to generate more personalized restructuring proposals and identify loans at risk of falling back into delinquency before they do.
Technology could make decision-making faster and improve the ability to distinguish between borrowers who can repay and those who need deeper restructuring. But algorithms alone are unlikely to resolve a debt overhang rooted in more than a decade of economic crisis, income losses and financial distress.
That leaves Greece facing a challenge through the end of the decade that is considerably larger than the one visible on bank balance sheets.
The country succeeded in moving an enormous stock of distressed debt out of its banks. It has yet to remove that debt from the economy.
As long as tens of billions of euros remain trapped in unresolved, redefaulted or otherwise distressed obligations, the success of Greece’s banking cleanup will remain incomplete.
The banks may have cleaned up their balance sheets. The €75 billion bill is still being carried by households, businesses and the real economy.
