According to Christina Papanikolopoulou, Partner at Zepos & Yannopoulos in Athens, the major issue at hand in Greece is the lack of clarity in the work of policy makers that “has a spill-over effect on legal, regulatory, and other issues.”
Among the recent examples Papanikolopoulou highlights are the various amendments to Greece’s NPL legislation (the latest of which was enacted on June14, 2018). She refers to the NPL legislation as “bipolar,” as it consists of two primary elements: one is protecting borrowers from aggressive servicing and collection strategies, while the other is the interest in banks and investors in resolving NPLs adequately.
“On one side, although a bit cumbersome, the Bank of Greece has created a very efficient framework for the servicing of banking loans,” Papanikolopoulou reports. Any purchase of NPLs must be made following engagement of a licensed servicer which is thoroughly supervised; in that sense, borrower protection is managed through the servicing schemes. Papanikolopoulou adds, “Nothing further is required or should be required in the frameworks applicable for the sale of NPLs.”
The law itself on acquisition of NPLs was introduced by the Greek government in December 2015, and Papanikolopoulou reports that, “it was redundant, as it created a lack of clarity, additional burdens on the sellers, and added nothing to the protection of borrowers. The framework was there all along, through well-tested securitization legislation repeatedly used by banks since its enactment in 2003.”
Turning to a happier subject, Papanikolopoulou notes that the European Commission is considering a pan-European servicing company, which Papanikolopoulou considers “a very positive step,” as the Greek market is the pioneer in Europe for introducing the framework for servicers of non-performing and performing loan portfolios. Indeed, the Greek framework has improved since its adoption in December 2015, she reports. “The process for the licensing and monitoring servicing activities by the Bank of Greece is now excellent,” she says.
Another improvement Papanikolopoulou cites involves the Greek court system. According to her, the difficulties in resolving enforcement-related disputes had a negative effect. “We had a different code and fragmented legislation on the insolvency of individuals and commercial entities,” she says, noting that the legislation is still fragmented. However, she reports, amendments introduced a few months ago are already leading to smoother work. “These amendments are fine-tuning the new procedures and frameworks, and while the work is in progress, it is getting better,” she says. “The approach has become more efficient, the judges are now more accustomed to this kind of dispute, and the entire process from enforcement to insolvency has become quicker and more user-friendly.”