“Yellow card” Stournara to red loan managers SKY

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The “yellow card” was shown by the Governor of the Bank of Greece, Giannis Stournaras, to the loan management companies, stating that “the Bank of Greece receives a large number of complaints from individuals and companies regarding the practices applied by the Management Companies”.

As he mentioned, speaking today at the annual general meeting of the Association of Loan and Credit Management Companies, issues of transparency of procedures and conditions of transactions (conduct of business) is an area that we take seriously and evaluate in the context of our supervisory activities. The essential observance of the recently revised Code of Ethics established by the Bank of Greece is a mandatory institutional framework for both credit institutions and service providers. Non-performing loans must be managed with full respect for the borrower and based on best practices, as provided in the Code of Ethics.

In addition, he pointed out that although it is necessary for the Management Companies to offer viable regulatory solutions to borrowers, so far, none of the management companies has applied for a license – as provided in Law 4354/2015 – which will allow refinancing. business. As Mr. Stournaras explained, this parameter is critical as in several cases of viable companies, the provision of liquidity in the context of debt restructuring is necessary.

The BoG governor praised the role played by management companies in tackling the problem of red loans, stating that “the operation of Management Companies in combination with the support of the Greek State through the systemic solution of the ‘Hercules’ program, facilitated sales transactions. (either directly to investors or through securitizations) which contributed to more than 75% of the reduction in red loans, from the 107 billion euros raised in March 2016 – with the Non-performing Loans ratio (NPL) to the total of loans to approach 50% -, at the end of June 2021 the amount of NPLs on the balance sheets of credit institutions (on an individual basis) fell to 29.4 billion euros and the NPL index to 20.3%.

Mr. Stournaras stated that in the EU as well. There is still no coherent regulatory and supervisory framework for loan management companies and their buyers, with the result that the secondary market for NIS in the EU is not functioning effectively and trading volume remains low.

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