Greece's main opposition party, PASOK-Movement for Change, has launched a sharp attack on the ruling New Democracy government over private debt policy, accusing ministers of protecting loan fund speculation at the expense of distressed debt holders. The party urged ministers to establish a statutory right of first refusal for cooperative borrowers when financial institutions sell non-performing loans.
In a joint statement issued from the party's headquarters in Athens, Milena Apostolaki, PASOK's head of private debt and borrower protection, and Dimitris Spyrakos, the sector's secretary, responded directly to recent criticisms raised by the Ministry of National Economy and Finance regarding private debt reform.
The opposition officials rejected government arguments that giving borrowers an option right to buy back their debt would violate European Directive 2019/1923 on insolvency. Apostolaki and Spyrakos dismissed the ministry's legal objections as cheap and flimsy evasions designed to preserve fund profitability.
They clarified that the proposed option right would not allow debtors to compel banks to sell them their debt. Instead, the mechanism would secure a borrower's right to be preferred over third parties exclusively when a credit institution independently decides to sell a portfolio of distressed loans.
Under the proposed structure, the bank's position would remain protected because sales would occur solely at the lender's discretion. Furthermore, the transaction would take place at an increased price compared to the heavily discounted rates offered to external investment funds.
Deterring debt commercialization and setting eligibility
PASOK argued that mass loan sales have harmed the national economy by turning credit tools intended for economic development into commodities for third-party speculation. Officials contended that enshrining a right of first refusal would serve as a powerful deterrent against the commercialization of private debt.
The party emphasized that the pre-emption right would not extend to all debtors indiscriminately. Under PASOK's legislative framework, eligibility would be restricted to borrowers who satisfy the requirements of the Code of Conduct, based on their credit history, previous good-faith behavior, and active cooperation with lenders.
Apostolaki and Spyrakos also criticized the government for referring struggling citizens to the existing Code of Conduct. They argued that the current framework is ineffective because it creates no binding obligations for creditors and fails to offer viable, long-term restructuring proposals for debtors.
PASOK, officially known as PASOK-Movement for Change, is a major centre-left political party in Greece and has traditionally been one of the primary parliamentary forces in the country. New Democracy, led by Prime Minister Kyriakos Mitsotakis, is the governing centre-right party. Private debt management and the treatment of non-performing loans, commonly known in Greece as red loans, have remained central issues in national political debate since the Greek government debt crisis of the 2010s, which left systemic banks holding tens of billions of euros in defaulted loans.
Slow progress on non-performing loan reduction
Turning to overall debt management performance, the PASOK representatives delivered a direct attack on the government's track record in reducing non-performing exposure. They stated that despite extensive portfolio sales, aggressive actions by loan servicing companies, real estate auctions, liquidations, and an out-of-court settlement mechanism, red loans had only decreased from 92 billion euros at the end of 2019 to 80 billion euros.
The opposition party called on the New Democracy administration to apologize to the public for what it termed a policy failure, alleging that ministers are prioritizing the interests of loan servicers and debt funds over domestic property owners and households.
Loan servicing companies, or servicers, are licensed financial entities that manage non-performing credit portfolios on behalf of credit institutions and distressed asset funds. Under Greek debt legislation enacted over the past decade, systemic banks transferred major tranches of defaulted mortgage, consumer, and corporate debt to offshore investment funds. While these transfers removed bad debt from bank balance sheets, enforcement mechanisms such as electronic property auctions have drawn widespread controversy from consumer groups and opposition lawmakers.
Repeated parliamentary proposals
PASOK confirmed that it will continue to advocate for the legislative establishment of the borrower option right. The party noted that it has repeatedly submitted relevant amendments in Parliament and will maintain its push to enact the measure as a critical safeguard for Greek society and the broader national economy.
