Featured Product

    EU Finalizes Directive on Credit Servicers and Credit Purchasers

    December 08, 2021

    The European Union (EU) finalized and published, in the Official Journal of the European Union, the Directive 2021/2167 on credit servicers and credit purchasers, which some also call the Non-Performing Loans (NPLs) Directive. The Directive enters into force on the twentieth day following that of its publication in the Official Journal. Article 32 on Transposition stipulates that member states of the European Union shall adopt and publish, by December 29, 2023, the laws, regulations, and administrative provisions necessary to comply with this Directive and shall immediately communicate the text of those measures to the European Commission.

    This Directive, together with other measures which the European Commission has put forward, in addition to the action taken by the European Central Bank (ECB) in the context of banking supervision under the Single Supervisory Mechanism and by the European Banking Authority (EBA), will create an appropriate environment for credit institutions to deal with NPLs on their balance sheets and will reduce the risk of future NPL accumulation. This Directive should enable credit institutions to better deal with loans that become non-performing by improving conditions for the sale of the credit to third parties. Moreover, when credit institutions face a large build-up of NPLs and lack the staff or expertise to properly service them, they should be able either to outsource the servicing of those loans to a specialized credit servicer or to transfer the credit agreement to a credit purchaser that has the necessary risk appetite and expertise to manage it. In short, this Directive lays down a common framework and requirements for:

    • credit servicers of a creditor’s rights under a non-performing credit agreement, or of the non-performing credit agreement itself, issued by a credit institution established in the Union, who act on behalf of a credit purchase
    • credit purchasers of a creditor’s rights under a non-performing credit agreement, or of the non-performing credit agreement itself, issued by a credit institution established in the Union

    This Directive should foster the development of secondary markets for NPLs in the European Union by removing impediments to, and laying down safeguards for, the transfer of NPLs by credit institutions to credit purchasers, while safeguarding borrowers’ rights. Any measures adopted should harmonize the authorization requirements for credit servicers. This Directive should, therefore, establish a Union-wide framework for both purchasers and servicers of non-performing credit agreements issued by credit institutions, whereby credit servicers should obtain authorization from, and be subject to the supervision of, the competent authorities of member states. The introductory text to the directive also explains that the European Commission should be empowered to adopt implementing technical standards, developed by EBA, to specify the templates to be used by credit institutions for the provision of information required under this Directive. The European Commission should adopt those implementing technical standards by means of implementing acts, pursuant to Article 291 of the Treaty on the Functioning of the European Union and in accordance with Article 15 of Regulation 1093/2010.


    Related Link: Directive 2021/2167

    Effective Date: December 28, 2021

    Keywords: Europe, EU, Banking, NPLs, Secondary Market for NPLs, Lending, Credit Risk, Reporting, Directive 2021/2167, EBA, EC

    Featured Experts
    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8596