Published by Global Banking & Finance Review®
Posted on March 31, 2026
3 min readLast updated: March 31, 2026
Add as preferred source on GoogleIMF official warns that nearly 3 million non-performing loans (NPLs), worth tens of billions of euros, continue to block growth in Greece by locking families and small businesses out of credit—despite progress in securitisation and banking reforms.
By Lefteris Papadimas and Edward McAllister
ATHENS, March 31 (Reuters) - Millions of unprocessed bad loans from last decade's debt crisis are slowing Greece's economic growth and stymying the rebound for families and businesses still locked out of lending markets, an International Monetary Fund official told Reuters.
The IMF estimates that nearly 3 million non-performing loans are impacting 2.4 million people, said Charles Cohen, an IMF specialising in financial markets. The sheer number has overwhelmed the Greek lending system, and without servicing the old loans many ordinary Greeks will be unable to borrow further.
"This is a massive number for the Greek economy," Cohen said. "The system has been a bit overwhelmed by them. And so we think that need to be reforms."
The Greek banking sector was bailed out during the 2009-2018 crisis after suffering catastrophic losses on government bonds and a surge in defaults as the economy went into freefall and Greece nearly fell out of the euro zone.
The economy has since rebounded: banks have been re-privatised and bailout loans are being repaid ahead of schedule. But absolute recovery is being slowed as ordinary Greeks, who suffered wage and pension cuts during years of austerity, are still locked out of the lending system.
"The big thing is the repair of household balance sheets," said Cohen. "You need to create a situation where the average Greek is again an active participant," in the market for mortgages and small business loans.
Non-performing loans (NPL) reached almost 50% of the banks' loan portfolios during the crisis. In 2019, Greece created a secondary bad loan market and an asset protection scheme, helping banks to securitise and transfer about 60 billion euros of non-performing loans to servicers.
However, the system has not responded as swiftly as lenders like the IMF would like. Court disputes between banks, servicers and mortgage borrowers can take years.
"The dockets are somewhat overwhelmed because you don't necessarily have judges who are specialized in these kinds of issues. So they take a long time to get through the system," Cohen said.
The fact th many small businesses remain outside the banking system since the financial crisis has led banks to concentrate their credit on a few large Greek corporates, making them more vulnerable to international turbulence.
"Lending to small and medium (businesses) remains at low levels," Cohen said. "I think for us the critical factor there is to try to re-diversify the banks into lending into these sectors. That's not an easy thing to do."
(Reporting by Edward McAllister and Lefteris PapadimasEditing by Keith Weir)
According to the IMF, nearly 2.4 million people in Greece are impacted by almost 3 million non-performing loans.
Millions of bad loans are slowing economic growth and preventing families and businesses from accessing new lending opportunities.
Greece created a secondary bad loan market and an asset protection scheme, allowing banks to securitize and transfer about 60 billion euros of bad loans.
Court disputes and overwhelmed legal systems mean cases take years to resolve, leaving many Greeks and small businesses outside the lending market.
Greek banks have concentrated lending on large corporates, making them more vulnerable, while lending to small and medium businesses remains low.
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