December 8, 2023

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“Clearing” for servants with the new license from the Ministry of Finance

“Clearing” for servants with the new license from the Ministry of Finance

By Vassos Angelito

A new license from the Bank of Greece must be obtained for all management companies already operating in our country from 2019, as stipulated in the new draft law submitted for consultation by the Ministry of National Economy and Finance and providing for a tightening of the operational framework for servicers.

The goal of both the Ministry of Finance and the Bank of Greece is to separate the “gray from the wheat” by proceeding with the cancellation of operating licenses for those servicers who do not manage NPL portfolios.

Sources familiar with the course of events indicate Existing management companies will have to resubmit their license application to the TbE, which will evaluate the applications in accordance with the provisions of the new law. More information will be included in the Executive Committee Law to be issued by the Central Bank after the relevant law is passed.

It is worth noting that out of the 23 receivables management companies licensed by the Bank of Greece, only seven companies manage “red” portfolios, while the remaining 16 companies remain almost inactive.

They are targeted by the new legislation, which provides for the cancellation of a credit manager’s operating license under conditions such as, among other things, not using the operating license within 12 months of its granting, as well as cessation of activities for a period exceeding six months, as referred to in the draft law under review. Discussion.

Even more stringent is the clause stipulating that the operating license will be revoked if the company “commits or has committed a serious breach of EU or national legislation and regulatory acts, including decisions of the Bank of Greece, on consumer protection or national legislation.”

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Towards higher concentration in the industry

It is worth noting that the concentration in the domestic sector of companies experiencing bankruptcy is so high that 90% of the total claims amounting to 70 billion euros managed by service companies are in the “hands” of only three companies: Cepal – a subsidiary of Alpha Bank; – It is a subsidiary of Alpha Bank, Intrum – a subsidiary of Piraeus and doValue – a subsidiary of Eurobank.

However, smaller service sources are cautious about their statements A greater focus will come if the provisions of the new draft law are implemented. The reason is that it stipulates the mandatory implementation of a digital platform to inform borrowers in real time for each management company by March 31, 2024.

The cost of implementation, according to industry sources, is so high that business plans for smaller services are unlikely to be able to “raise” it. The risk is that funds or their parent companies based abroad, which view the cost involved as unsustainable, will be forced to sell their portfolios to the three industry leaders.

But even for them, the cost of implementing online systems – by banks’ e-banking standards – is disproportionately high and the end-March implementation deadline is “overly ambitious”. However, they themselves admit that the Greek market “cannot accommodate” more than 5-6 maintenance companies and take the consolidation of the sector for granted in the coming months.