EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 27 February  2019   
on a draft law for the protection of primary residences  
(CON/20 19/9) 
 
Introduction and legal basis  
On 19 and 22 February 2019  the European Central Bank (ECB) received request s from the Greek 
Ministry of Finance for an opinion on a draft law for the protection of primary residences of natural 
persons in financial difficulty  (hereinafter  the ‘draft law’) . 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC1, as 
the draft law relates to rules applicable to financial institutions ins ofar as they materially influence the 
stability of financial institutions and markets  and the specific tasks conferred upon the ECB concerning 
the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty . In accordance with 
the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing 
Council has adopted this opinion.  
 
1. Purpose of the draft law  
1.1 Objectives of the draft law   
The stated objectives of the draft law are  fourfold: first, to protect targeted groups of society from 
the repossession of their primary residence; second, to contribute to the deleveraging of the stock 
of non-performing exposures (NPEs) in the banking system by converting them into performing 
loans, thereby contri buting to more robust bank balance sheets; third, to strengthen social 
cohesion; and fourth, to encourage a good repayment culture by incentivi sing debtors to make 
prompt repayment s and avoid re- defaulting.  
1.2 Eligible applicants  and eligible debt   
The draft law entitles all n atural persons  who have a right in rem over real estate property used as 
their primary residence in Greece to protect this property from compulsory sale by restructur ing, in 
accordance with the draft law,  debt of any kind owed to credit institutions  (including those that are 
subject to a special liquidation procedure) that has been in arrears for at least 90 days as from 31 
December 2018 and is secured on the property. Applicants can be natural persons with or without 
the capaci ty to be declared bankrupt , i.e. both merchants and non- merchants. An applicant can 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
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2 also request  the restructuring of debt owed to credit institutions by a third person (i.e. not the 
applicant him or herself) if such debt is secured on the applicant’s primary residence. The 
applicant’s  in rem right over the real estate property may comprise full or bare ownership, or the 
right to use, and may be exclusive or based on a notional share (e.g. co- ownership).   
1.3 Eligibility thresholds   
An applicant is eligible to apply for debt restructuring provided that the following conditions , set out 
in the draft law,  are met: ( a) the tax value of the primary residence to be protected does not exceed 
EUR 250,000 at the time of the submission of the application;2 (b) a mortgage or pre- notation of a 
mortgage is registered on the primary residence prior to the submission of the application; ( c) the 
applicant’s family income in the last year in which a tax return could be filed was no more than 
170% of reasonable living expenses3; (d) the total outstanding debt (including principal and 
compound interest) on the debt that is eligible to be restructured under the draft law on the date of 
submission of the application does  not exceed E UR 130,000; ( e) the total value of the  applicant’s 
deposits and securities does not exceed 50% of the total debt brought under restructuring at the 
time the application is submitted; ( f) the total value of the  real estate property owned by the 
applicant other than his or her  primary residence does not exceed 200% of the total amount of debt 
brought under restructuring  at the time the application is submitted.  
1.4 Application  through online platform  
As a first step,  applicants will submit their application via  an online platform that is to be developed 
and operated by the Special Secretariat for Private Debt in collaboration with the General 
Secretariat for Computer Systems of the Greek Ministry of Finance.  An applicant who has already 
benefitted from a rest ructuring procedure under the draft law the draft law cannot submit a second 
application, even if this second application seeks  the restructuring of different debts than under the 
first application or if the applicant has forfeited the restructuring arrangement resulting from the first 
application.  An applicant who has already benefitted from a restructuring procedure under the draft 
law may request the restructuring of debt that has fallen in arrears for at least 90 days after the final 
submission of  the first application where, following submission of the application, the applicant or 
the applicant’s spouse or dependent becomes subject to a specified disability or is registered with 
the Registry for Unemployed Persons of the Labour Employment Office.  However, an applicant 
who has already submitted an application ma y submit a second application if the first was 
withdrawn prior to completion of  the restructuring through the platform procedure or if the previous 
application was not successful vis -à-vis a ny of the creditors  (i.e. where no debt restructuring took 
place) . Eligible applicants may apply within one year of the entry into force of the draft law , while  
people who are registered with the Registry for Unemployed Persons may apply within three years 
from the entry into force of the draft law  and people with a specified disability may apply at any 
                                                 
2  The property value is determined by the tax base of the real estate tax owed or, where no such tax is owed, by the 
objective value of the property as determined under  Law 1249/1982 and M inisterial Decision 1310/1998.  
3   “Reasonable living expenses” are defined by the draft law as the household’s most basic living expenses plus 
additional catering costs as determined by the Secretariat for Private Debt. The draft law further provides that until 
such time as they are set, the reasonable living expenses determined from the annual economic budgets survey 
conducted by the Hellenic Statistical Authority shall be taken as reasonable living expenses.  
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3 point in time.  
1.5 Pre-screening of eligibility   
The platform does not allow the final submission of an application if the documentation uploaded 
does not allow it to conclude that the eligibility requirements or the deadlines for submitting an 
application have been met. A n applicant  may request permissi on from the Secretary for Private 
Debt for the final submission of his/her  application if he/she can prove that the platform wrongly 
classified  him/her  as ineligible or wrongly  deemed that his/her  application was not submitted within 
the deadline set . The Secretary decides on the matter within 30 days  of the applicant’s relevant 
request . This decision may be appealed, within two months of its issuance, to the head for the first 
instance administrative courts of the region where the primary residence is located4.  
1.6 Restructuring proposals   
Once the application has been submitted in a final way  as set out above, the platform notifies the 
creditors whose claims are covered by the application . The creditors are required to submit 
restructuring proposals , on a stand- alone basis or jointly , within one month from such notification.  A 
creditor who can establish that the applicant is ineligible or that the creditor’s claim is ineligible to 
be restructured may refuse to submit a restructuring proposal but must substantiate  this by 
uploading the relevant documentation to  the platform. The applicant must state which of the 
creditors’ restructuring proposals  he or she accepts or rejects w ithin one month of their submission.  
1.7 Restructured amount payable and mandatory debt write- off  
To protect his or her primary residence, an applicant must pay in monthly amortising instalments 
either 120% of the commercial value of the primary residence at the time of the application plus 
interest calculated on the basi s of the three- month E uribor interest rate plus 2%; or, if 120% of the 
commercial value of the primary residence exceeds the total amount of debt included in the 
restructuring application, then such latter amount . In each case,  payments are to be made over a 
period of 25 years, which may not extend beyond the applicant’s 80th birthday.  Any debt exceeding 
this amount is mandatorily  written off .  
1.8 State subsidy   
Upon the application of either the applicant or any creditor participating in the restructuring process, 
the State subsidises the restructured monthly instalments, provided that all debt eligible to be 
restructured under the draft law has been restructured  through the platform or the court s, and that 
the restructuring complies with the relevant requirements . Subsidisation by the State lasts for the 
duration of the restructuring. The conditions applicable to,  and the amount of , the State subsidy will 
be reviewed by the State every three years. After one year from the first determination or the latest 
adjustment of the amount of the S tate subsidy, the applicant may request a change to such 
amount, if changes in the applicant’s income or reasonable living expenses or changes in the 
benchmark interest render compliance with the terms of the restructuring impossible for the 
                                                 
4  The hearing date for ruling on the appeal is set within two months of submission of the appeal. The ruling is 
irrevocable, is published within two months from the hearing date, and is notified within two months from the 
publication (i.e. within four months from the hearing date) to the Secretary for Private Debt, who has to implement it 
within one month of such notification.  
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4 applicant. The S tate subsidy will be discontinued i f the applicant delays payment of his or her 
portion of the restructured instalment such that a creditor establishes a right to declare the 
applicant to be in default, even if this right is not exercised. The joint ministerial decision 
determining the amount and conditions for granting the S tate subsidy must comply with Union  
legislation on State aid and ensure that the State subsidy is granted to applicants who are unable 
to pay the restructured monthly instalments and that the amount of the subsidy must be such that 
the applicant will be in  a position to repay such instalments from  income alone after taking into 
account reasonable living expenses.  
1.9 Judicial restructuring  
The applicant may apply  to the courts for the protection of his or her primary residence within 30 
days from the terminati on of the platform restructuring process if  this restructuring process i s 
unsuccessful  in respect of  one or more creditors. The petition to the court must be uploaded to the 
platform, which notifies it  to the creditors who participated in the restructuring.  
The court determines the monthly instalments in line with the requirements of  the draft law , namely 
the amount to be mandatorily written off and the 25-year mandatory duration of the restructuring 
scheme , deduct ing whatever amount the applicant has paid in the interim.  
1.10 Stay o n enforcement   
All pending enforcement measures  in relation to the applicant’s primary residence, whether of a 
permanent or temporary , individual or collective nature, are automatically suspended as from the 
notification of the application to the creditors through the platform, until the expiration of the 30- day 
deadline set for the applicant to have  recourse to the courts. This automatic stay of enforcement is 
binding on all creditors participating in the process  and applies only for the applicant’s first 
application under the scheme.  
At any point in time during the hearing procedure at first or second instance t he court may order , on 
its own initiative or the applicant’s request,  an extension of the stay on enforcement until it issues 
its ruling on the merits of the case. Such extension is granted where the judge has reasonable 
grounds to believe that the applicant’s petition has merits and that the applicant’s primary 
residence will have been liquidated before the issuance of the court ’s ruling  on the merits, and on 
condition that the applicant pays a sum amounting to 30% of the last instalment payable before the 
submission of the restructuring application  to each creditor who is a party to the court proceedings . 
However, the court may reduce or even waive such interim instalment  in its entirety, and in some 
cases it is required to grant an extension of the s tay on enforcement5. The court may revoke the 
extension order at any point.  
The stay on enforcement outlined above does not prevent enforcement on the applicant’s primary 
residence by a n unregulated private sector creditor whose claims have not been restructured and 
who has registered a lien ( i.e. a mortgage or pre- notation of mortgage) before submission of the 
finalised application by the applicant. In such a case, all creditors may lodge all their claims in their 
                                                 
5  For example, where a creditor failed to submit a restructuring proposal without  having alleged that the applicant’s 
debt,  or the relevant claim , was ineligible for  restructur ing, or where the applicant requested an interim order in the 
petition to the court outlined in paragraph 1.9.   
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5 entirety.  
The stay on enforcement does not prevent the taking of enforcement measures over the applicant’s 
other assets, or the filing of petitions or orders of payment for claims covered  by the restructuring 
application.  
1.11 Consequences of restructuring through the platform or the courts   
After a successful restructuring agreement has been reached involving at least one creditor, a s tay 
of enforcement on the applicant’s primary residence applies and is binding on all creditors whose 
claims were restructured through the platform or through the courts  and for all creditors whose 
claims were not eligible for restructur ing, except for ( a) private sector creditors whose claims 
against the applicant were not eligible for restructur ing under the draft law and who had registered 
a mortgage or a mortgage pre- notation against  the applicant’s primary residence before the final 
submission of the application,  and (b) creditors whose claims against the applicant were eligible for 
restructuring under the draft law but were ultimately  not restructured. These two categories of 
creditors may launch their claims against the applicant in their entirety , but only after the auctioning 
of the property.   
Notwithstanding the above, private sector creditors whose claims against the applicant were not 
eligible for restructuring under the draft law may only enforce their claims if the court grants them 
permission to do so. Such permission is granted only if the applicant’s remaining liquidable 
property is insufficient to satisfy the claims of all creditors. However, even in this situation the 
applicant may still request a period of up to three years to pay the amount enforcing creditor would 
receive if  the resi dence were  auctioned; the creditor may only enforce if the applicant (re)defaults 
on these payments and by following the procedure outlined in paragraph 1.12  below . 
If the applicant consents, a creditor may register a mortgage over the primary residence for a claim 
which comes into existence during the restructuring period. No stay of enforcement applies to that 
creditor.   
After a successful restructuring and upon ful l compliance of the applicant , the p ortion of the  
restructured claims exceeding the restructuring amount payable by the applicant (see paragraph  
1.7 above) , as well as  all liens on the primary residence that secure the restructured debt, are 
extinguished.  
1.12 Applicant’s (re)default during the restructuring period  
If the applicant delays payment of restructured monthly instalments such that the total amount that 
is in arrears exceeds the sum of three monthly instalments, the relevant creditor whose debt is in 
arrears must notify the applicant and request compliance with the repayment schedule within 30 
days. If the applicant does  not comply , the creditor may apply to the court for the applicant to be 
taken out of the scheme by submitting a statement to the platform,  and thereafter enforce on the 
applicant’s primary residence, in which case all creditors may launch their claims against the 
applicant in their entirety . The applicant may still challenge this by proving that the delay in 
payment  was due to force majeure events, or that the creditor abused his  or her rights.  
 
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6 2. General observations   
2.1 Appropriate time to consult the ECB 
In cases of particular urgency that do not allow for a normal consultation period, the consulting 
authority may indicate urgency in the consultation request and ask for a shorter time limit for the 
ECB’s opinion to be adopted. However, the ECB has emphasi sed on several occasions  in its 
opinions6 that even in cases of particular urgency , or where the legislation has reached an 
advanced stage, the national authorities are not relieved of their duty under Articles 127(4) and 
282(5) of the Treaty to consult the ECB  at an appropriate stage in the national legislative process7 
that allows suff icient time for: (a) the ECB to examine the draft legislative provisions , and (b) the 
relevant national authorities to take the ECB’s opinion into consideration before the provisions are 
adopted.  In this respect, it is worth recalling that, as noted by the European Court of Justice, the 
obligation to consult the ECB under the Treaty is intended ‘essentially to ensure that the legislature 
adopts the act only when the body has been heard which, by virtue of the specific functions that it 
exercises in the Union framework in the area concerned and by virtue of the high degree of 
expertise that it enjoys, is particularly well placed to play a useful role in the legislative process 
envisaged’8.  
2.2 Secondary legislation under draft law  
The ECB underlines  that this opinion is based only on the latest version of the  draft law  that was 
provided to it on 22 February 2019 . In this respect, the draft law delegates the regulation of 
significant aspects  of the new scheme to secondary legislation, most notably ministerial decisions  
to be issued jointly by four m inistries . Given the critical nature of these aspects  and their bearing on 
the overall scheme, and given the fact that no secondary legislation was submitted to it, it is difficult 
for the ECB to assess the scheme in a comprehensive way.    
2.3 Basic principles governing debt restructuring schemes  
Any private debt restructuring scheme should be formulated in a manner that safeguards financial 
stability, promotes market efficiency and liquidity  and solvency of banks , and supports the 
adequate flow of credit to the economy. While partial write- down of debt can sometimes offer a 
solution in cases where the borrower’s solvency can be restored, and where creditor losses can be 
minimised, it is important to ensure that any such sc heme should: ( a) not result in blanket debt 
forgiveness , without taking both the debtors’ repayment capacity  and banks’ loss absorption 
capacity  into account ; (b) promote a prompt payment culture and prevent  moral hazard, namely the 
creation of incentives not to service debt in a timely manner ; (c) be geared towards minimising the 
risk of abuse, ensuring the bona fide conduct of debtors ; and ( d) preserve financial stability and the 
soundness of credit institutions . Any relevant measures , including primary and secondary 
legislation, and the supportive administrative and IT infrastructure that is necessary for the 
                                                 
6  See, e.g., paragraph 2. 2 of Opinion CON/2011/87, paragraph 2 of Opinion CON/2012/27, paragraph 2.1 of Opinion 
CON/2014/59, paragraph 2 of Opinion CON/2014/72, paragraph 2.1 of Opinion CON/2014/85 and paragraph 2 of 
Opinion CON/2014/87.  All ECB opinions are published on the ECB’s websi te at www.ecb.europa.eu.  
7  See second sentence of Article 4 of Council Decision 98/415/EC.  
8  Judgment of the Court of Justice of 10 July 2003, Commission of the European Communities v European Central 
Bank , C-11/00,  ECLI:EU:C:2003:395, paragraphs 110 to 111.  
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7 implementation of such measures , should above all prove workable and efficient in the long term, 
increase the efficiency and speed of both out -of-court and court restructurings , while at the same 
time mitigat ing moral hazard and maintaining credit discipline9.  
2.4 Swift and proper implementation  
Proper and swift implementation of the envisaged scheme, both by all authorities administering 
and/or involved in the scheme and by credit institutions and other entities affected by it, is of crucial 
importance for ensuring the balance described in paragraph 2.3 above and thereby preventing 
serious adverse consequences for banks’ asset quality and capital positions. Proper 
implementation of the envisaged framework involves , inter alia, devoting sufficient resources and 
ensuring the establishment of efficient procedures and infrastructures  for facilitating the conclusion 
of restructurings, whether  through the platform or through the courts.  
2.5 Need for i mpact assessment  
The draft law is being introduced without the benefit of any financial and economic impact 
assessment. The ECB stresses the critical importance of thoroughly assessing beforehand the 
impact of the draft law on the capital adequacy and financial position of credit institutions in the 
short and medium term as well as its effects on the functioning of the financial system  and the 
economy as further described in paragraphs 3.1 to 3.3 below , also taking into account moral 
hazard risks and the interaction of the draft law with existing le gislation as further described in 
paragraphs 3.4 to 3.5 below . It is only by making such a prior assessment that it may be possible to 
mitigate potential negative implications10. In the absence of such impact assessments or other 
background information explaining the underlying rationale for the specific parameters of the 
scheme , for example the proposed thresholds  for eligibility and mandatory restructuring 
parameters,  and illuminating the comparative advantages of the proposed sche me as opposed to 
other ways of protecting primary residences, it is difficult for the ECB to be confident that the stated 
objectives of the draft law will be achieved11. 
 
3. Specific observations  
3.1 Effects on banking sector  
3.1.1  In the context of its direct responsibility for the supervision of significant credit institutions in the 
euro area, the ECB  directly supervises four significant  credit institutions  in Greece. The elevated  
level of nonperforming loans in Greece has been one of the key areas of focus in recent years  and 
is being closely monitored from a supervisory perspective. The four significant Greek credit 
institutions have committed to achieve certain NPE reduction targets  by 2021. The Greek 
authorities have also committed to ‘ implement reforms aimed at restoring the health of the banking 
system , including NPL resolution efforts by  ensuring the continued  effectiveness of the relevant 
                                                 
9  See paragraph 2.4 of Opinion CON/2010/8, paragraph 2.4 of Opinion CON/2012/40, paragraph 2.3 of Opinion 
CON/2012/70,  paragraph 3.1 of Opinion CON/2013/34, and paragraph 2.2.2 of Opinion CON/2018/13.  
10  See paragraph 3.4 of Opinion CON/2010/8, paragraph 2. 2 of Opinion CON/2010/34, paragraph 2.1 of Opinion 
CON/ 2012/40, paragraph 2.3 of  Opinion CON/2012/70, and paragraph 2.2.2 of Opinion CON/2018/13.  
11  See paragraph 2.2 of Opinion CON/2010/34, paragraph 2.3 of Opinion CON/2012/40, paragraph 2.3 of Opinion 
CON/2012/70, and paragraph 2.2.2 of Opinion CON/2018/13.  
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8 legal framework ’12. It is suggested that the draft law , including the parameters set out by related 
secondary legislation,  gives due consideration to these commitments . 
3.1.2  The proposed scheme appears to be a far -reaching  initiative , with an extensive scope of 
applica tion and a mandatory nature.  The draft law may have negative implications for credit 
institutions, especi ally for their capital adequacy, provisioning needs  and asset quality , as they may 
have to adjust the valuation of their loan books . This could have  a potential ly significant impact on 
their provisioning  levels and capital given the uncertainty introduced by the draft law in terms of, for 
example, the number of debtors that will eventually apply to the scheme, the amount of debt to be 
included, the level of haircuts to be applied, and the valuation that m ay need to be performed for 
supervisory and accounting reasons upon the introduction of the scheme.   
3.1.3  The draft law may  also have an adverse effect on loan sales and securitisations  as it allows for 
debt securitised under the Law 3156/2003 on bond loans, securitisation of claims and other 
provisions13, and debt transferred under the Law on servicing of non- performing loans14, also to be 
restructured under its provisions , and affords  legal protection to a wide range of debt, including 
business debt15. There is  a risk  that these provisions may disincentivise future NPL sales and 
securitisations  and also impact already concluded NPL sales and securitisations. I n this respect the 
draft law may encumber  credit institutions’ access to securitisation markets in order  to transfer non-
performing loan portfolios and obtain liquidity and, consequently, the extension of credit to the 
economy.  
3.1.4  The ability of credit institutions to effectively manage credit risk depends on a reliable, predictable 
and stable legal framework that adequately balances the interests of both creditor s and debtor s. 
However, the draft law introduces changes that may affect the ability of lenders to give effect to the 
agreed terms of secured credit in Greece , which could undermine legal certainty and the adequate 
management of credit risk in credit institutions. In this respect, it is important to carefully consider 
the impact of the draft law on credit agreements in order to ensure legal certainty and avoid undue 
interference with the contractual and property rights of credit institutions, and to prevent moral 
hazard from arising in the relationship between creditor s and debtor s16. 
3.2 Effects on financial stability  
3.2.1  Given the wide scope of the types  of debt covered by the draft law , including business debt , and 
the importance of portfolios collateralised by primary residences in total bank assets, the draft law 
may have a potential ly significant negative impact on the credit institutions affected and 
implications for financial stability. Potential concerns impacting on credit institutions that  need to be 
assessed from the outset stem particularly from the mandatory haircut imposed on all debt 
exce eding the relevant amounts described, the mandatory 25 -year duration of the restructuring 
period,  the stay on enforcement for potentially long periods of time,  and the interaction of the draft 
                                                 
12  See Annex to the Eurogroup Statement on Greece of 22 June 2018, available on the Council’s website at 
https://www.consilium.europa.eu . 
13  Government Gazette Issue A 157/25.6.2003.  
14  Government Gazette Issue A 176/16.12.2015.  
15  See Article 1(3), (4)  and (5) and Article 17(2) and (3) of the draft law , and Opinion CON/2010/8.  
16  See paragraph 2.2 of Opinion CON/2015/56 and paragraph 2.2.3 of Opinion CON/2018/ 13.  
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9 law with existing legislation , most notably the household insol vency law . To resolve some of these  
concerns, it is suggest ed to refine the scope of  the debt and debtors covered by the draft law , and 
set the relevant parameters only after a thorough assess ment  of their likely  impact on creditors  has 
been undertaken.  
3.2.2  Given the above, the ECB suggests that the consulting authority engages  in meaningful and timely 
consultations  with all relevant stakeholders, including with the Bank of Greece as the national 
macroprudential authority , as such consultations  might shed light on aspects of the draft law which 
are not immediately apparent.  
3.3 Effects on Greek economy  
As noted above, the scope of possible mortgage debt restructuring under the draft law is extensive . 
The draft law gives rise to risks of deteriorati on in the payment culture, moral hazard risks and risks 
that the new scheme will be abused by strategic defaulters , as also described in paragraph 3.4 
below . As a result, the draft law may adversely affect the future supply of credit and the pricing of 
mortgages. Credit institutions could respond by unduly tightening lending conditions, in particular to 
compensate for credit losses resulting from the application of the draft law , and thus increase the 
cost of financing for the economy  generally , in particular for those firms and households that may 
be in financial distress but continue to service their debt . The implications  of the draft law  for the 
real economy are therefore uncertain.  
In addition, the potential for interference with the ability of lenders to give effect to the agreed terms 
of secured credit in Greece might render the secured lending market less attractive , discouraging  
new entrants. This could stifle competition in financial services in Greece, due to a perceived 
increase in legal uncertainty.  It might also possibly hinder, rather than support, the flow of credit in 
the economy.  
3.4 Moral hazard risks  and overall  impact on payment culture 
The automatic stay of enforcement which starts upon notification of the application to the creditors 
through the platform , and can be extended to cover the procedure at the court, could encourage 
strategic defaulters to apply, especially where court proceedings are not swift. Moreover, the fact 
that a court may grant at first or second instance an order extending the automatic stay on 
enforcement granted at the platform stage of the restructuring, coupled with the option afforded to 
applicants under  the draft law  to submit any number of res tructuring applications i f previous 
applications were unsuccessful or the applicant withdrew them , could also encourage  strategic 
defaulters to apply, if these two elements lead in practice to a suspension of all enforcement 
measures over the primary residence for protracted periods of time. It is also underst ood that there 
are currently no provisions covering the interim period between the entry into force of the draft law 
and the date on which the platform becomes operational . In addition, even assuming that the stay 
on enforcement starts after the pre- screening of eligibility of the applicant  by the platform17, it is not 
clear whether enforcement will in practice take place during the period between the filing of the 
application by  the applicant  and the n otification of such filing to the relevant creditors through the 
                                                 
17  See Article 6 of the draft law.  
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10 platform, as the final decision on eligibility lies with the administrative court and thus any 
enforcement measures taken by creditors until such final decision might be overturned. Suspension 
of enforcement for long periods of time is detrimental for the overall payment culture, as the 
application of the household insolvency law has shown since 2010, and endangers the path of the 
four significant credit institutions towards their  NPE reduction targets , as it curtails their ability to 
collect under their loans. This detrimental effect is increased by the fact that the new scheme is 
intended to apply in parallel with the household insolvency law, which also provides automatic 
stays on enforcement over all assets of the debtor for very long periods of time until the relevant 
court cases are ruled upon. In addition to the above, certain provisions of the draft law bear the risk 
of being open to manipulation by applicants . Considering all the above,  a risk of contamination for 
currently performing loans  and a further undermining of the overall payment culture cannot be 
excluded18.  
3.5 Interaction of draft law with existing legislation   
3.5.1  The draft law is not being introduced in a legal and judicial vacuum . The following laws are of 
particular relevance to the draft law: Law 3869/2010 on restructuring of debt of overindebted 
individuals  also provides for  debt write- off and restructuring through court proceedings , allows for  a 
stay on enforcement over all assets of the debtor for very long periods of time, and sets out  State 
subsidisation options19; Law 4469/2017 on out of court workout  mechanism  allows for out -of-court 
restructuring of debt for a different category of borrowers20; the Code of Civil Procedure sets out 
auctioning and foreclosure procedures21; the laws regulating bankruptcy , special administration 
and other collective proceedings22; the Bank of Greece’s Code of Conduct , which  lays dow n rules 
and procedures to be followed by banks when dealing with borrowers whose debt is in arrears23; 
laws that provide for  benefits  related to housing,  particularly  for low-income households24; and 
various  tax and accounting rules  are also relevant to the draft law .  
3.5.2  No explanatory memorandum has been subm itted alongside the draft law explaining why a 
completely new scheme which will apply on top of, and in parallel with, existing legislation is 
needed in order to achieve the objectives  of the draft law , or what the envisaged consequences of 
the interaction of the draft law with existing legislation are expected to be. Harmonising existing and 
new legislation and aligning its implementation enhances regulatory consistency and limits 
opportunities to strate gic defaulters to exploit potential gaps in the regulatory framework  or in the 
way it is applied . In addition, new legislation that affords protection to borrower s should not unduly 
impede the process of NPE restructuring and the ability of banks to pursue strategic defaulters, for 
                                                 
18  See also paragraph 3. 7 below.  
19  Law 3869/2010, Government Gazette Issue A 130/3.8.2010.  
20  Law 4469/2017, Government Gazette Issue A 62/3.5.2017.  
21  Presidential decree 503/1985, Government Gazette Issue A 182/24.10.1985.  
22  Law 3588/2007, Bankruptcy Code, Government Gazette Issue A 153/10.70.2007 and Section D of Law 4307/2014 
on measures to deal with the consequences of the financial crisis and to enhance employment: incentives to settle 
debt of small businesses and professionals to credit institutions and special procedures to settle debt of corporates, 
Government Gazette Iss ue A 246/15.11.2014.  
23  Decision of the Credit and Insurance Committee of the Bank of Greece 195/29.7.2016.  
24  Article 3 of Law 4472/2017 on housing benefit , Government Gazette Issue A 74/19.5.2017  and Minister ial Decision 
D13/oik.33474/1934, Government Gazette issue B/2282/15.6.2018.  
ECB -PUBLIC  
11 example by facilitating misuse of the framework to block the carrying out  of already scheduled and 
notified auctions.  
3.5.3  It is underst ood that the new scheme is intended to apply in parallel with the exi sting household 
insolvency law, debtors  will be allowed to apply under either or both framework s, and this option is 
also open to debtors with an application that is pending under one of the two frameworks. Debtors 
who have already benefited from debt restructuring and write- off under the household insolvency 
law may benefit from a second restructuring and write -off of debt under the draft law . Payments 
made by a debtor under one framework will be deducted from those payable by the debtor under 
the other  framework. The stay of enforc ement over all assets of the borrower applicable under the 
household insolvency law will remain in place for all other assets except for the primary residence 
until the court issues a ruling on a case under the draft law . Even debtors who have been deemed 
by the courts  to be ineligible under the Law on household insolvency because of fraudulent 
behaviour  will be eligible  to apply under the draft law if they meet the relevant thresholds. An 
eligibility criterion under the household insolvency law is that the debtor must be ‘cooperative’ as 
such term is defined in the Code of Conduct adopted by the Bank of Greece. It is not clear why this 
criterion has not been inc luded in the draft law as well.  Lastly , it is underst ood that the courts 
designated by the draft law as competent to deal with the restructuring and write- off process under 
the draft law are the same as those currently competent for household insolvency  petitions .  
3.5.4  Allowing the two frameworks to interact in such a way gives rise to a number of risks . First, there is 
a risk  of further delaying household insolvency proceedings currently pending and creating 
additional backlogs in the courts . Court backlogs coupled with stays on enforcement affect the 
ability of banks to collect on their loans and thus ultimately their ability to lend.  In addition, 
measures taken or planned by the authorities to gradually reduce and eliminate the household 
insolvency backlog might be undermined25. Second, there is a risk of increasing (re)defaults of 
debtors who have already benefited from debt restructuring and write- off under the household 
insolvency law. Third, there is a risk of allowing debtors to benefit twice from debt restructuring and 
write -off. All of these risks in turn increase moral hazard risks.  
3.6 Valuation of security and property under the draft law  
The draft law introduces two different methods for valuing security and property26, leaves undefined 
the method for valuing assets that are relevant in order to determine negative eligibility27, and does 
not determine  how the ‘commercial ’ value of property will be determined, when this term is used. 
This aspect of the draft law may give rise to increased litigation between creditors and applicants 
regarding the value of the property, which may in turn lead to longer stays on enforcement. In 
addition, the fact that  the draft law leaves the means of determining  the commercial value of the 
property undefined  may open the door to the use of non- expert witnesses in the courts, thus 
                                                 
25  In June 2018 the Greek Ministry of Justice produced an action plan containing measures to gradually reduce and 
ultimately eliminate the household insolvency backlog of cases by the end of 2021, in accordance with the relevant 
policy commitment. See Annex to the Eurogroup Statement on Greece of 22 June 2018, available on the Council’s 
website at https://www.consilium.europa.eu . 
26  See Articles 3(1) and 3(2) of the draft law.   
27  See Articles 1(2)(e) and 1(2)(f) of the draft law.  
ECB -PUBLIC  
12 encouraging  strategic defaulters to apply under the scheme. L egal certainty for the valuation of 
security and assets is of central importance for the entire scheme as well as for the protection of 
secured creditors’ rights since the draft law determines eligibility  to participate in the scheme based 
on the value of the primary residence collateralising  such debt  and on the value of certai n other 
assets of the applicant28.  
3.7 Legal certainty  
3.7.1  Clear formulations of the rights and obligations created by the draft law, as well as a careful 
consideration of the impact of the draft law on existing legal relationships between creditors and 
debtors, are necessary in order to ensure legal certainty and prevent moral hazard. There are 
provisions in the draft law that suffer from legal uncertainty and could be helpfully reformulated in 
order to enhance clarity and reduce risks29. Legal uncertainty arising out of the draft law may lead 
to further delays in the restructuring process, necessitating an increased involvement of the courts 
in the application of the draft law. Legal uncertainty may also provide an incentive for strategic 
defaulters to exploit  this uncertainty by bringing court proceedings under the draft law in order to 
benefit from the stay on enforcement.   
3.7.2  Added uncertainty arises from the wide range of discretions conferred on executive bodies involved 
in the restructuring process under the draft law . The draft law assigns to the Secretary for Private 
Debt the competence to decide,  where the platform rejects an application, on eligibility under the 
new scheme, subject to judicial review . The following issues may be addressed by means of 
ministerial decisions: the operating parameters of the online platform  and details pertaining to the 
platform restructuring process ; the contents of the application, the list of documents required to 
support it and the deadlines for the submission of each; the  conditions governing  and the method 
for calculating the amount of the State subsidy ; the State body responsible for deciding on the 
State subsidy and any other specific matter pertaining to such subsidy. The way in which 
secondary legislation will determine the operating parameters of the platform and the 
documentation required by applicants is crucial because the draft law appears to base the 
restructuring and write- off of debt through the platform on these two elements without giving 
creditors the opportunity to contest the amount of debt as declared by the applicant, or to justify 
their refusal to offer a restructuring proposal (which they can do only if the applicant or the debt 
covered by the application is ineligible) on the basis of documentat ion of their own. This is 
expected to lead to increased litigation regarding the exact amount of debt to be restructured 
and/or the eligibility of the debtor or the debt covered by the application, with the implications 
described in the previous paragraph.  This also increases the necessity to safeguard the duty of 
disclosure at the application stage but also throughout the duration of the restructuring period.  
Lastly, given that the amount of the State subsidy will determine the collections made by credit 
institutions  under the scheme during the restructuring period together with payments made by the 
applicants , it is important to have legal certainty as to the elements related to the  subsidy.   
 
                                                 
28  See Article 7 of the draft law  and paragraph 4 of Opinion CON/2012/70.  
29  See Articles  1(2)(c) , 1(2)(d) , 1(2)(f) , 3(2) and 8(1) , 9(2), 10(1) , 12(2), 12(3) , 11(3) of the draft law .  
ECB -PUBLIC  
13 3.8 Compliance with basic  legal  principles and State aid rules  
It is for the Greek authorities to assess whether the draft law complies with applicable principles  of 
Greek constitutional law , including the basic legal principles of fairness , equal treatment and 
proportionality . 
It is for the Commission to assess  the draf t law’s compliance with Union  state aid rules . 
3.9  Regular reviews  
In order to ensure the effectiveness of the framework, an independent body should regularly review 
and assess the eff ectiveness  of the scheme by reference to its objectives , its impact on Greek 
credit institutions and the overall payment culture in the short and medium term, and it s interact ion 
with other laws. One year following its introduction might be a reasonable point at which to review  
the overall operation of the new  scheme30. 
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main,  27 February  2019.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
30  See also Opinion CON/2013/34.