Today I’m going to talk about an incredible comeback that… literally nobody saw coming.
Let’s go back to 2015. Greeks wake up to closed banks and capital controls. ATMs have a €60 daily withdrawal limit, the Athens Stock Exchange does not even open for trading, and Greece becomes the first member of the Eurozone to fall into junk status.
Everyone had written the country off. And now? The Athens Stock Exchange has outperformed the Nasdaq 100 over a five year period. Yes, you read that right.
To understand how massive this turnaround really is, we first need to remember where it all started. In April and June of 2010, S&P and Moody’s downgraded Greece to junk. The first Eurozone country to lose investment grade status. And from there, the collapse began.
By February 2016, the General Index had fallen to 516.7 points. Down from the 5,334.5 points it reached in October 2007. We are talking about a decline of more than 90%.
And where was the biggest damage done? The banks. The banking index had lost 99.6% of its value. It had practically been wiped out, with non performing loans reaching 47% of total portfolios in 2016. The worst figure in the entire European Union.
To put that into perspective, other troubled banking markets in Europe were sitting around 5% to 8%. Greece was at 47%. “How is that even possible?” you might ask. Put simply, Greek banks did not just have a loan problem. They had an entire recession sitting on their balance sheets.
And this is exactly where the Hercules program entered the picture. Through state guarantees on senior tranches, the banks managed to offload roughly €57 billion of bad loans through securitizations. Then came the second phase. The slow, boring, but critical work. Stabilizing deposits. Cutting costs. Returning to profitability.
And they succeeded. The combined net profits of the four systemic banks, National Bank of Greece, Eurobank, Piraeus, and Alpha Bank, reached nearly €5 billion in 2025. Then came the dividends. Piraeus, Eurobank, and Alpha distributed around 55% of profits. National Bank pushed its payout ratio to 86%, helped significantly by buybacks.
And the stocks now? National Bank and Piraeus are both up more than 500% over the last five years. And do you know what is even crazier? Despite this explosive rally, the banks still look cheap. They trade at around 9 times 2026 earnings and 1.4 times tangible book value. Nearly 20% below European banks. UBS estimates a 2027 P/E ratio of 8.4 compared to 9.5 for the European average. And for the full picture, U.S. stocks are trading near 20 times forward earnings. That is a massive valuation gap.
But there is another factor that almost nobody talks about. And it is the one the IMF itself called the “quiet engine.”
We are talking about the transformation of the Greek tax administration. In a paper published last week, three IMF economists analyzed how the entire system changed across three phases.
Phase one: 2010 to 2012, stabilizing revenues.
Phase two: 2013 to 2017, consolidating 288 local offices into 119 and creating the Independent Authority for Public Revenue in 2016.
Phase three: from 2018 onward, real time electronic invoicing, POS integration, and digital analytics.
And the results? VAT compliance rose from 65% in 2010 to 96% in 2014. VAT revenues increased from 7.1% of GDP to 9.5% today. And the total tax to GDP ratio climbed from 20.5% in 2009 to 28% in 2025.
So what does that actually mean? A primary surplus close to 5% of GDP in both 2024 and 2025. Greece is now one of the few EU countries running a fiscal surplus. And the debt? From a peak of 210% of GDP in 2020, it fell to 145% in 2025.
In 2025 alone, debt dropped by 10 percentage points. As a result, all the major rating agencies have restored Greece to investment grade status.
And this is where things get even more interesting.
On November 24, 2025, Euronext completed the acquisition of the Athens Stock Exchange, with an acceptance rate of around 74%. The Greek market is now part of Europe’s largest exchange group, alongside more than 1,800 listed companies. What does that mean in practice? Far more buyers. International index funds that track pan European benchmarks automatically add Greek stocks to their portfolios.
And MSCI is considering upgrading Greece to Developed Market status, effective from September 2026. That means Greece would leave the small emerging markets basket and enter the massive pool of developed markets. JP Morgan is already forecasting a 16% gain for MSCI Greece in 2026.
Of course, not everything is perfect. Inflation remains elevated, tensions in the Middle East continue, tourism still accounts for 21% of GDP, and the Recovery Fund expires in August 2026.
