Greek Central Bank Governor Yannis Stournaras voiced his support for the government’s legislative intervention to universally apply a recent Supreme Court (Areios Pagos) ruling concerning loans governed by Law 3869 — commonly known as the Katseli Law. Speaking to the Athens-Macedonian News Agency (ANA-MPA), Stournaras described the measure as essential, clarifying critical legal uncertainties that had emerged following the court’s decision and significantly reducing ambiguity around its implementation.
A Necessary Clarification
“The provision introduced by the Minister of National Economy and Finance regarding the Areios Pagos ruling on Law 3869 was necessary. It answered reasonable questions that had arisen and ultimately benefited borrowers. At the same time, it defined the scope of the ruling’s application, thereby reducing uncertainty,” Stournaras stated.
What Changes for Around 100,000 Borrowers?
The new provision was approved last week by the full session of the Hellenic Parliament and applies to approximately 100,000 compliant borrowers who have been included under the Katseli Law framework. Under the revised framework, the method for calculating interest has changed — resulting in a substantial reduction in monthly repayment amounts.
Crucially, the new calculation method applies retroactively. This means that excess interest payments made in previous years will be offset against the remaining loan balance.
In practice, many borrowers will not only see lower monthly instalments but also a shorter overall repayment period, as previously paid amounts will be deducted from the outstanding debt.
Impact on the ‘Hercules’ Program
The new regulation also affects the state-backed ‘Hercules’ program — a scheme launched to securitise non-performing loans (NPLs). Minister Kyriakos Pierrakakis has noted that lower monthly repayments translate into reduced future recoveries for the Hercules program. To address this, the legislation provides for a proportional sharing of the financial impact between banks and the Hercules program, based on the amounts each party has already recovered.
According to the Ministry of National Economy and Finance, the overarching aim is to preserve balance among three priorities: protecting borrowers, maintaining banking system stability, and upholding fiscal responsibility.
Estimated Fiscal Impact
Based on ministry estimates, the total fiscal impact of reduced repayments is projected at around €500 million over a 20-year horizon, covering loans worth €16.5 billion in aggregate. Retroactive application adds an estimated €200 million in additional cost.
However, a significant portion of this cost is not expected to fall on the public budget, as credit institutions themselves are anticipated to absorb much of the burden.
What Remains Unaffected?
The new legislative measure does not apply to debts restructured through the Out-of-Court Settlement Mechanism. In those cases, the existing regime remains in force — meaning monthly payments continue to be calculated on a ‘toko-chreolitic’ (amortising) basis.