The historic Supreme Court decision 6/2026 did not mark the end of the long-running "battle" between borrowers and banks and servicers over the interpretation of the Katseli Law. Financial institutions are preparing to launch a counteroffensive on the critical issue of interest calculation, with an interpretation of the Supreme Court’s decision that could result in a significant increase in interest charges on restructured loans.Banks and servicers have settled on this interpretation, which effectively brings… interest charges through the back door to borrowers with restructured loans under the Katseli Law. However, they have not yet finalized their decisions on the strategy they will follow next, as two scenarios are being considered:
1. The first—and most aggressive—is to introduce new repayment plans for restructured loans, based on their interpretation of the Supreme Court’s decision. This would mean that borrowers who are expecting to be effectively relieved of interest payments would suddenly face a new burden, almost as large as the burden that would result from calculating interest on the total outstanding principal.
2. The second tactical scenario predicts that lenders will pass the… legal buck back to the Supreme Court, asking the Highest Court to interpret its own ruling on the calculation of interest, while also considering the interpretation offered by the lenders. This would once again provoke reactions, to the extent that it would cause further delays in resolving the dispute between borrowers and lenders, but it would allow banks and servicers to continue hoping for a reversal of the judicial decisions that have so far been unfavorable for them.
The interpretation that generates… interest
The legal teams of financial institutions have arrived at an interpretation of the Supreme Court’s decision that generates… interest from a different angle. Until now, the Supreme Court’s ruling has “locked in” the calculation of interest on each installment paid (and not on the outstanding principal, as is standard banking practice), while the interest rate is also “locked in” by the Katseli Law.
The lenders’ legal teams, however, “play around” with the third parameter for calculating interest: time. They rely on the Civil Code and a reference to a Supreme Court decision, according to which “interest shall be calculated from the outset on the fixed monthly installment for the entire period from the start of the arrangement until its expiration.”
The practical result of this interpretation by financial institutions is that it creates an interest calculation model which dramatically increases the amounts debtors will pay, bringing them very close tothey would pay if the calculations were based on the total outstanding principal.
If the banks’ interpretation prevails, the interest burden does not remain low and stable, but increases linearly over time, creating an arithmetic progression. The result can be more easily understood through an example of a repayment plan with a principal of 120,000, to be repaid over 240 months (20 years) with an installment set by the court at 500 euros):
· If interest is calculated monthly at a fixed rate of 500 euros with an annual interest rate of 3%, the borrower will be charged only 300 euros in interest over the twenty-year period; in other words, the arrangement will effectively be interest-free.
· According to the banks’ interpretation, interest will increase over time. The first installment will incur 1.25 euros in interest; by the 100th installment (interest accrued over 100 months), the interest will rise to 125 euros (€625 for the total installment including interest), and the final installment (the 240th) will raise the interest to €300 (interest calculated over 240 months), “inflating” the monthly payment to €800.
· The overall result is that the borrower, instead of paying a minimal amount of interest (e.g., 300 euros for the entire twenty-year period), will be required to pay the sum of an arithmetic progression. The total interest in this case would amount to 36,150 euros on top of the principal of 120,000 euros.
· In other words, this results in an increase of 11,950% (!) compared to the interest they would pay using the “straightforward” monthly calculation method. The total interest amount (€36,150) is not far from the €39,724 he would pay in the same example if the interest were calculated on the total outstanding principal, based on the “classic” banking method.
“Contrary to the spirit of the Supreme Court’s decision”
Lawyers representing borrowers strongly dispute the interpretation given by financial institutions to the Supreme Court’s decision.
As highlighted on Euroday.gr by Dimitris Spyrakos, a lawyer and rapporteur for the Katseli Law in his capacity as Secretary General of the Ministry of Development, this interpretation runs counter to the spirit of the Supreme Court’s decision. The decision makes it clear that the primary and most important objective is to protect borrowers from over-indebtedness, with the Supreme Court, in this case, rejecting the standard, banking methods of calculating interest, so that the debtor can sustainably service the arrangement.
Legal experts note that the Plenary explicitly ruled that the Magistrates’ Court’s decision does not merely “restructure” a bank loan, but creates a new judicial arrangement, and the monthly installment is calculated based on the borrower’s maximum repayment capacity.
If the court ruled that the borrower can afford to pay a maximum of, say, 500 euros per month, the banks’ interpretation, which raises the installment to 800 euros (due to accumulated time) in the 20th year, effectively nullifies the protection, legal experts representing the borrowers emphasize.
According to the Supreme Court’s reasoning, which was developed to refute the banks’ arguments regarding the imposition of interest on the outstanding principal but would also apply to the new interpretation they are offering—which raises interest rates— the additional burden would lead to “the borrower being trapped once again in exorbitant installments, exceeding their financial means, thereby undermining the spirit and purpose of the law.”
In any case, the Supreme Court’s decision “separates” the calculation of the Katseli arrangement from the strict rules of banking/contractual operations, that is, it moves away “from banking terminology in the strict sense,” while the banks’ interpretation throws the classic interest calculation out the window once again.