Despite a significant recovery from the economic crisis a decade ago, Greek banks face limitations in financing growth. According to economists at the European Central Bank (ECB), a large portion of the country’s private debt exists outside the banking system, hindering the banks’ lending capabilities. The Greek banking sector experienced substantial losses between 2010 and 2015, including losses on Greek government bonds, a surge in non-performing loans (NPLs), and a sharp decline in deposits.
Macroeconomic conditions have since stabilised, boosting bank liquidity, profits, and capital. Economists note Greek banks are again funding households and businesses, supporting investment. Loans to non-financial corporations have increased significantly, and mortgage loans are recovering. The four major Greek banks, National Bank, Eurobank, Piraeus, and Alpha Bank, reported combined net earnings of almost 5 billion euros for 2025, benefiting from higher credit expansion and fee income.
In 2024, the Greek government fully privatised these four banks after they were bailed out with 50 billion euros a decade prior. The ECB recently approved the resumption of dividend payments after 16 years. Greece established a secondary bad loan market and an asset protection scheme in 2019, aiding banks in securitising and selling approximately 57 billion euros of non-performing loans.
However, the transfer of these problematic loans to loan servicers has left households and firms with unresolved debt, effectively excluding them from bank lending. This significantly limits the banks’ ability to finance growth, as the assets involved are equivalent to about a third of Greece’s GDP. Addressing this substantial amount of distressed loans remains a key challenge for the Greek economy.
