Greece’s Bad Loan Crisis Continues to Limit Credit Access Despite Economic Recovery

Greece’s economy has staged a remarkable recovery from the sovereign debt crisis that erupted in 2009, posting growth that now exceeds the European Union average. However, a massive backlog of unresolved non-performing loans (NPLs) continues to weigh on the country’s financial system, preventing millions of individuals and small business owners from accessing new credit and slowing broader economic progress.

One of those affected is George, a jewelry store owner near Athens, who has spent the past 16 years trying to resolve a €100,000 business loan taken out as Greece’s financial crisis unfolded. As consumer spending collapsed and his business revenue plunged, the loan changed hands multiple times before reaching a credit servicing company. Despite requesting lower monthly repayments, his proposal was rejected, pushing the dispute into Greece’s courts, where it remains unresolved.

During the lengthy legal process, unpaid interest has caused George’s debt to nearly double. Unable to secure another business loan, obtain a credit card, or finance investments, he says the unresolved debt has left him financially trapped for more than a decade.

His experience reflects a broader issue affecting Greece’s banking sector. According to government data and credit servicing firms, approximately 1.5 million Greeks—nearly one-quarter of the country’s adult population—remain effectively excluded from traditional banking services. Nearly half of those affected are small business owners, limiting entrepreneurship and investment across the economy.

Industry estimates suggest that around €75 billion in unresolved debt, equivalent to nearly one-third of Greece’s gross domestic product, remains tied up because of legal disputes or delayed settlements involving loan servicing companies.

Legal experts argue that this unresolved debt burden continues to undermine economic growth by restricting access to financing for businesses and households. Without access to business loans, mortgages, or other forms of credit, many entrepreneurs are unable to expand operations, modernize equipment, or recover fully from the financial crisis.

The Greek Justice Ministry says reforms are beginning to improve the situation. Officials point to amendments to the civil code and the appointment of roughly 1,000 additional judges, which have reduced average case resolution times from around 1,200 days two years ago to approximately 315 days today. The ministry expects the remaining problematic loans to be largely resolved by 2028.

However, lawyers representing borrowers and financial experts believe the timeline may be overly optimistic. They argue that many cases still face delays approaching or exceeding 1,000 days, with some disputes already scheduled for hearings as late as 2035. They estimate it could take at least another five years before the majority of outstanding loans are fully settled.

The roots of the problem trace back to 2015, when Greece introduced legislation allowing banks to transfer more than 90% of their bad loans—worth roughly €110 billion—to specialized credit servicing companies under agreements with international bailout lenders.

Although intended to clean up bank balance sheets, the secondary loan market developed slowly because of administrative delays and public opposition. Many borrowers had pledged their primary homes as collateral, and concerns over potential foreclosures led thousands to challenge debt settlements in court, creating an enormous judicial backlog.

Finance Ministry officials acknowledge that legal disputes remain one of the biggest obstacles to resolving Greece’s non-performing loan problem. International organizations, including the International Monetary Fund and the European Union, have repeatedly urged Greece to accelerate judicial reforms and improve the efficiency of its debt resolution process.

Credit servicing companies also argue that inconsistent court rulings and lengthy legal procedures have complicated their ability to restructure loans quickly and fairly. The Hellenic Loan Servicers Association, whose members include Intrum and DoValue, says legal uncertainty continues to hinder progress.

Meanwhile, many borrowers remain under severe financial pressure. A hotel owner on the Greek island of Crete, who borrowed approximately €1.2 million before the financial crisis, said the servicing company now expects repayment of roughly €2 million within two years. Facing mounting obligations, the business owner says even routine investments, such as replacing outdated air-conditioning equipment, have become impossible.

As Greece continues its economic recovery, resolving the country’s long-running non-performing loan crisis remains essential for restoring access to credit, supporting small businesses, and ensuring sustainable long-term growth.