Bank Of Greece Sa · ATHEX:TELL
Bank Of Greece Sa — EBRD Conference: Distressed loans in the Greek banking system: restructuring portfolios, r (March 2016)
16 slides from Bank Of Greece Sa's conference presentation, Mar 10, 2016
Slide 1: Comments on the NPL Law and the BoG regulation of NPL Buyers and Services
Stathis Potamitis Comments on the NPL Law and the BoG regulation of NPL Buyers and Services EBRD Conference: “ Distressed loans in the Greek banking system: restructuring portfolios, reviving enterprises” 10 March, Bank of Greece
Slide 2: Why the NPL Law?
Why the NPL Law? • Law 4354/2015 (“NPL Law”) purports to establish the framework for the operation of an NPL market in Greece • In implementation of that law, the BoG has drafted a draft regulation for the licensing and supervision of buyers and services of NPL portfolios • Why do we have the law an
Slide 3: Many impediments to an NPL market
Many impediments to an NPL market • The Greek banks carry a very substantial number of NPLs and may need the option of selling some of them off to third parties • Third parties may be more efficient in settlements and collections that banks • However, a market has failed to emerge, even though stron
Slide 4: What are the impediments?
What are the impediments? • The most recent agreement with the official creditors required the HFSF to produce a study on these impediments; some of the impediments identified that relate to the legal framework are: – The insolvency laws and their implementation – Inefficiencies in the enforcement o
Slide 5: Deficiencies in insolvency law and implementation
Deficiencies in insolvency law and implementation • This may deserve to be called: the elephant in the room • There are problems with the law, the courts, the insolvency professionals and the coordination of lenders • Some progress has recently been made: – in pre-insolvency proceedings (but still e
Slide 6: Pressure on creditors’ rights
Pressure on creditors’ rights • Strong institutional bias in favor of debtors that may represent danger for payment culture in Greece • Some recent limited enforcement procedural improvements have faced strong resistance and implementation uncertain • Legislative interventions exacerbate problem: –
Slide 7: Impediments as to NPL transfer
Impediments as to NPL transfer Transfer (assignment) of loan receivables: 1. requires notice to the individual debtor which is both costly and time consuming, 2. requires the payment of stamp duty on the face value of the transferred asset (except if between credit institutions), 3. may be subject t
Slide 8: Impediments as to servicing NPLs
Impediments as to servicing NPLs An NPL servicer who is not a bank may be concerned about the following: 1. the servicing of bank debts lies on the border line of banking services -regulatory risk for those that intend to engage in that business 2. a credit institution has certain privileges in term
Slide 9: How the new legislation deals with transfer impediments
How the new legislation deals with transfer impediments obstacles What the new assessment legislation provides Notice requirement Notice by all suitable Insufficient – should have means (in addition to been waived (see publication) securitisation law that only requires publication) Stamp duty (2.4%
Slide 10: Continuing on transfer impediments
Continuing on transfer impediments Obstacles What the new assessment legislation provides Requirement for No exemption; only Major problem – permission under data lifting of non disclosure exemption in privacy rules obligation for transferor securitisation law Succession in litigation Yes √ Contract
Slide 11: The new law creates new transfer impediments
The new law creates new transfer impediments • The new legislation states that NPLs may be transferred exclusively to entities licensed as NPL buyers • Requirement to have provided notice to each individual debtor within 12 months • Transfer only of NPls (and of performing if by same debtor) • Vague
Slide 12: How the new legislation deals with servicing impediments
How the new legislation deals with servicing impediments obstacles What the new legislation assessment provides Regulatory risk – re Licensing provided √ providing banking services expressly Banks’ enforcement n/a x privileges Restructuring privileges n/a x under Dendias law Inability to provide Yes
Slide 13: And some new impediments as to servicing
And some new impediments as to servicing • Servicing may only be taken over by a licensed services; seems to exclude all others, including credit institutions or transfer of the economic interest while the transferor reserves the servicing • Servicer is deemed a “supplier” of the debtor for the appl
Slide 14: There could be an easy win
There could be an easy win • Rely for transfers on Law3156/2003 (the “Securitisation Law”): – a framework for the transfer of loan receivables by the originating banks to SPVs, in order that they may be used as assets to back the issuance of debt securities to be privately placed; – used successfull
Slide 15: Limited regulatory intervention needed only for servicing
Limited regulatory intervention needed only for servicing • Servicing to be reserved for licensed entities or credit institutions • Clearly distinguish servicer status from collection agencies (which are call-centres) • provide licensed servicers with the same procedural enforcement privileges as th
Slide 16: Thank you for your attention!
Thank you for your attention!