Greece: Financial Sector Assessment Program-Technical Note on Insolvency and Creditor Rights and Workout of Distressed Debt by Credit Servicers

This paper presents a Technical Note on Insolvency and Creditor Rights and Workout of Distressed Debt by Credit Servicers for the Greece Financial Sector Assessment Program. This note provides an overview of the insolvency and creditor rights’ regime in Greece and analyzes select relevant aspects in the context of an overall assessment of the Greek financial sector. The note also focuses on the workout of distressed debt by credit servicers. The process of mortgage enforcement has significantly improved compared to a decade ago, but more needs to be done to further align it with the standard. Greece has a modern legal toolkit for the resolution of enterprise distress, but a formal reorganization process is lacking. The Bank of Greece (BoG) should improve the supervision of credit servicers, given the systemic amount of distressed debt they manage and the slow pace of NPL resolution achieved to date. The enhanced cooperation should help the authorities remove remaining technical impediments to efficient workouts by credit servicers, including access to up-to-date contact information of distressed debtors and dealing with the backlog of cases related to the Katseli Law.