Millions of unresolved bad loans continue to weigh heavily on Greece’s economic recovery and limit access to credit for households and businesses, an International Monetary Fund (IMF) official told Reuters on Monday.
According to the IMF, nearly 3 million non-performing loans are affecting around 2.4 million people in Greece, creating what officials describe as a structural burden on the banking system that has yet to be fully resolved since the country’s financial crisis.
Banking system still burdened by crisis-era debt
IMF financial markets specialist Charles Cohen said the scale of bad loans remains “massive” for the Greek economy and continues to overwhelm parts of the financial system.
He said the legacy of the 2009–2018 debt crisis, during which Greece’s banking sector was recapitalized after severe losses and widespread defaults, is still preventing a full recovery in lending activity.
While Greece’s banks have since been re-privatised and bailout loans are being repaid ahead of schedule, Cohen said many households remain unable to access mortgages and small business financing.
Credit access still limited for households and SMEs
Cohen stressed that the key challenge is repairing household balance sheets so that ordinary Greeks can once again participate in credit markets.
He said lending to small and medium-sized enterprises remains low, with banks instead focusing on a smaller number of large corporate borrowers. This concentration, he warned, could leave the banking sector more exposed to external shocks.
Reforms and bad loan reduction efforts underway
During the financial crisis, non-performing loans in Greece peaked at nearly 50% of total bank portfolios. In response, authorities created a secondary bad loan market and an asset protection scheme in 2019, allowing banks to securitize and transfer roughly €60 billion in non-performing loans to servicing firms.
Despite these measures, the system has not cleared bad debt as quickly as expected.
Legal bottlenecks slowing financial repair
Cohen pointed to prolonged legal disputes between banks, loan servicers, and borrowers as a major obstacle. Court cases, he said, can take years to resolve due to overloaded judicial dockets and a lack of specialized judges handling financial cases.
These delays, he added, are slowing the cleanup of balance sheets and extending the time before credit conditions can fully normalize.
The IMF official said the priority now is to diversify bank lending back toward small and medium-sized businesses, a shift he described as necessary but difficult.
