Greece's debt settlement mechanism cuts over 30% for nearly half of bank arrangements

Greece's out-of-court debt settlement mechanism is accelerating, with total arrangements surpassing 20 billion euros since its inception. By the end of July, 66,578 arrangements had been finalized, covering initial debts of 20.19 billion euros. The total debt reduction, or 'haircut,' across these settlements amounted to 6.53 billion euros.

In July alone, 2,164 new successful arrangements were completed, totaling 511 million euros. Since July 27, 2026, the platform has also begun accepting applications for debts exceeding 5,000 euros, broadening its accessibility. The average debt reduction provided by the mechanism stands at 13.5% for public debts and 28.4% for debts owed to financial institutions, which include banks and servicers. Significantly, 48.3% of arrangements with financial institutions achieved a reduction of over 30%.

Specific average reductions include 13.49% for public debts, 13% for mortgage loans, 29.54% for business loans, 32.69% for consumer loans, and 38.28% for other products. The average repayment duration for these debts is 16 years for public debts and 15.7 years for financial institution debts, with mortgage loans averaging 25 years and business loans 19 years.

The approval rate for applications remains consistently high at 80%, particularly after creditors were mandated to participate. This has bolstered the mechanism's credibility and effectiveness. Economically vulnerable households continue to benefit, with 271 arrangements made for such debtors in July, including 26 for individuals with disabilities. Furthermore, 603 auctions were suspended through a prepayment measure, safeguarding debtors' property and primary residences. The reduction in the total debt threshold from 10,000 to 5,000 euros significantly expands the number of eligible individuals, allowing smaller debtors to utilize the mechanism. This system allows for comprehensive debt restructuring with public entities, social security funds, banks, and servicers, offering up to 240 installments for tax and social security debts and up to 420 installments for debts to banks and servicers.