New draft law on transfer and servicing of non-performing loans

A new draft law has been submitted to the Parliament which constitutes the non-performing loans settlement plan of the Greek Government as part of the bailout agreement requirements. This draft law permits explicitly, for the first time in Greece, the delegation of servicing (i.e. legal and accounting management, negotiation as well as actual collection) of claims and the transfer of claims arising from loans granted by credit institutions and securitization vehicles and sets forth the requirements for such servicing and transfer. The draft law is expected to be approved by the Parliament tomorrow.


The main provisions of the draft law are the following:

  • Servicing and transfer of non-performing loans is permitted to Greek and EEA companies which have obtained a special license by the Bank of Greece. In case of EEA companies, they must have been duly established in Greece via a branch. The procedure for obtaining such license and the organizational and conduct of business rules of such companies are described in the draft law.
  • The servicing of non-performing loans must be based on a written agreement between the lender and the servicing company, which includes at least the details of the particular claims concerned as well as the description of the particular duties comprising the ‘servicing’ (which may consist of legal and accounting monitoring of the claims, negotiating and collecting claims, concluding a compromise etc). The agreed servicing fee must also be explicitly mentioned in the agreement.
  • The banking secrecy is lifted to the extent required for servicing companies to perform their duties under the servicing delegation agreements mentioned above. This is a key point as Greece benefits from banking secrecy regulations.
  • Transfers of non-performing loans are also permitted provided that the transferee is a transfer company established under the provisions of this law, authorized by the Bank of Greece and with a minimum share capital of € 100,000. The transfer agreement must be concluded in writing and registered to a public record as provided in Law 2844/2000. The transfer must also be notified in writing to the borrower and the guarantor(s), if any.
  • The transfer is permitted provided that within 12 months prior to such transfer, the borrower has been invited in writing to settle/arrange his/her obligations towards the original lender.
  • A loan is deemed to be non-performing (and thus within the ambit of this law), if the obligations arising therefrom (or any part of these obligations) are overdue for more than 90 days. To be noted, performing loans of borrowers who have other non-performing loans towards the same lender, can also be subject to transfer or servicing under the provisions of this law.
  • The transfer must not have as result the deterioration of the legal and other position of the borrower and the guarantor(s), if any. Besides that, the provisions of the Lenders’ conduct of business rules will be applicable to the transferee.

The following types of loans are excluded from the scope of this law: (i) consumer loans; (ii) mortgage loans where the security interest (mortgage) has been imposed on the real estate which is used by the borrower as his/her main residence; (iii) loans and credits to SMEs in the meaning of the Commission Recommendation 2003/361/EC; and (iv) loans guaranteed by the Greek Government. Separate regulation is expected to be issued for these types of loans in the future.


For additional information about the points covered above or indeed any other issue concerning the recapitalization of Greek banks, you may contact Michael Tsibris or Giannis Koumettis of our offices.


This does not constitute legal advice and should not be seen as such. Please seek specific professional assistance concerning your individual circumstances before acting on any of the issues discussed in this note.


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