Greece considers solutions for 72 billion euro non-performing loan stock

Greece is considering two primary solutions to address its 72 billion euro stock of non-performing loans (NPLs). While the banking sector's NPL ratio has dropped below 3% from nearly 50% a decade ago, private debt remains a significant economic burden.

The first proposed solution involves a fixed debt haircut combined with the assumption of repayment obligations by younger heirs. This approach aims to extend the loan duration and reduce monthly installments to levels manageable for the debtor's actual financial capacity.

The second option involves transferring property ownership in exchange for full debt relief, while granting the borrower a life estate (right of residence). This allows the debtor to remain in their home despite losing ownership. These models, used in various forms across Europe, aim to overcome obstacles such as the aging profile of debtors, who average 60 years of age.