Framework on the management by credit institutions of their non-performing exposures
Non-performing exposures and the new rules on the management of forborne exposures are defined in the Commission's Implementing Regulation (EU) laying down implementing technical standards for the submission of prudential reports by institutions.
The new definition of "exposures" is broader than "loans" as it includes all debt instruments (loans and advances and debt securities) as well as off-balance-sheet exposures.
The new definition of "non-performing exposures" includes, in addition to exposures more than 90 days past due, exposures that are "unlikely to pay", which are designated as "non-performing" on the basis of qualitative criteria, although they are either performing or are less than 90 days past due.
In May 2014, the Bank of Greece adopted Executive Committee Act 42/30.5.2014 laying down a specific framework of requirements for the management of exposures in arrears and non-performing exposures by credit institutions.
This framework imposes the following main obligations on credit institutions:
- to establish an independent arrears and NPL management (ANPLM) function;
- to develop a separate, documented ANPLM strategy, the implementation of which will be supported by appropriate Management Information Systems (MIS) and procedures; and
- regular reporting to the management of the credit institution and the Bank of Greece.
In February 2015, the Bank of Greece adopted Executive Committee Act 47/9.2.2015ins introducing modifications/improvements to reporting templates under ECA 42/30.5.2014. Some key points of the modified templates include:
- Detailed segmentation of portfolios in accordance with the general principle of "mutually exclusive" segments.
- Detailed information by portfolio segment and arrears bucket.
- Establishment of a new sub-category of denounced exposures under non-performing exposures, due to the need to monitor these exposures separately, and a detailed account of legal workout activities.
- Breakdown of collateral by type of collateral.
- Sectoral breakdown of corporate loans.
- Minimum standardisation and classification of widely applied forbearance measures and resolution and closure solutions in 22 indicative types.
In August 2016, under Executive Committee Act 102/30.8.2016, the Bank of Greece introduced modifications/improvements to reporting templates, in order to include data allowing the monitoring of:
- Operational targets and Key Performance Indicators (KPIs) regarding banks' actions to deal with their non-performing exposures.
- Actions to manage loans in arrears in accordance with the Code of Conduct.
In March and April 2018, under Executive Committee Acts 134/05.03.2018 and 136/02.04.2018, the Bank of Greece introduced new modifications/improvements to reporting templates, in order to include new data allowing the monitoring of:
- Auction procedures.
- Repossessed vollateral.
- Participation in Out-of-Court Workouts (OCW).
Reporting tables under the new template COR 25 shall be submitted every quarter on a solo basis by obligor credit institutions authorised in Greece, for submissions concerning data from 31.12.2016 onwards, according to the relevant Reporting Instructions. The first table shall also be submitted every quarter on a consolidated basis.
Revision of the Code of Conduct
The "Revision of the Code of Conduct under Law 4224/2013" was adopted by decision of the Bank of Greece Credit and Insurance Committee 195/1/29.07.2016 (Government Gazette B 2376), after consultations with public bodies, supervised institutions and consumer organisations.
The revised Code of Conduct establishes general principles of conduct for both obligor institutions and borrowers with a view to finding forbearance or resolution and closure solutions for loans in arrears, taking into account the circumstances of each borrower.
The revised Code of Conduct, inter alia, further specifies its scope, makes a clear distinction between procedures applicable to natural persons and those applicable to micro enterprises and other enterprises, gives special attention to vulnerable social groups and includes specific provisions on cases of multiple creditors.
The provisions of the revised Code of Conduct apply to all supervised institutions that extend any type of credit in Greece pursuant to Article 3(1)(1) and (22), Article 9(2) and Articles 34, 36, 38, 41 and 43 of Law 4261/2014, including branches of foreign credit institutions, financial institutions within the meaning of Article 3(1)(22) of Law 4261/2014 and the companies referred to in Article 1 of Law 4354/2015, as currently in force.
As from the entry into force of the revised Code of Conduct, Credit and Insurance Committee Decision 116/1/25.08.2014 (Government Gazette B 2289), as currently in force, is repealed, without prejudice to Article 99 of Law 4389/2016. In this context, the time limit for borrowers to respond remains 15 working days, as specified in the definition of “cooperating borrower”, until any adjustment to that limit by a new decision of the Government Council for Private Debt Management.