European Alarm Sounds, This Country Faces 'Financial Storm' Once Again
Jakarta, CNBC Indonesia - Greece is once again facing serious challenges in the financial sector, despite having recovered from a major crisis a decade ago. Economists from the European Central Bank (ECB) have warned that the ability of Greek banks to drive economic growth remains limited due to the unresolved burden of private debt.
In its latest blog, citing Reuters on Monday (23/3/2026), the ECB stated that most problematic debt is now held outside the banking system. This situation makes it difficult for banks to channel financing optimally, even though their performance indicators have improved.
As background, the Greek banking sector suffered massive losses during the 2010 and 2015 crises. At that time, non-performing loans (NPLs) reached nearly 50% of their total loan portfolios, deposits halved, and they incurred billions of dollars in losses from ‘haircuts’ on the bonds they held.
As the economic situation improved, Greek banking began to recover. Liquidity increased, profitability improved, and bank capital became stronger. Lending to non-financial corporations has risen significantly, while housing loans are starting to recover.
“Greek banks are once again able to finance households and businesses, supporting investment. Loans to non-financial corporations have increased significantly, and mortgage lending has recovered,” said the ECB economists.
Greece’s four largest banks—National Bank, Eurobank, Piraeus, and Alpha Bank—even recorded combined net profits of nearly €5 billion in 2025. Their non-performing loan ratios have also dropped dramatically to below 4%, approaching the European banking average.
The Greek government has also completed the privatisation of these four banks in 2024, after previously injecting bailout funds of up to €50 billion during the crisis. The ECB has even allowed the banks to resume dividend payments after 16 years.
However, behind this recovery, structural problems still loom. Greece previously transferred around €57 billion in non-performing loans to the secondary market through an asset protection scheme. As a result, much of the debt is now handled by loan management companies, not banks.
The impact is that households and businesses still burdened with non-performing debt find it difficult to access new credit. The ECB assesses that this condition limits the banking sector’s ability to support overall economic growth.
The value of these non-performing assets is even equivalent to about a third of Greece’s gross domestic product (GDP). The ECB stresses that resolving these non-performing loans remains one of the biggest challenges the country must face in the future.
“The assets involved are equivalent to about a third of Greece’s GDP. Handling this large volume of non-performing loans remains one of the toughest challenges,” said the ECB.