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InternationalConferenceon
Commercialpropertymarketindicesand
StrategicactionsfordistressedpropertyassetsinGreece
Athens,13March2015
Existinglegalframework
fordistressedassets
inGreece
AggelikiZERVA,BankingSupervisionDepartment
1
NPLs in Greece: High and rising levelsNPLs/loan portfolio
47,3
26,131,8
49,5
28,1
34,4
0,0
10,0
20,0
30,0
40,0
50,0
60,0
Consumer loans Mortgage loans Business loans
%
Q4 2013
Q3 2014
Source:BankofGreece 2
Asetofregulatoryinitiativesthatcouldcontributetoresolvingtheproblem:
strengtheninginstitutionalcapacityofthejudicialsystem, improvinginsolvencylegislation, bettercoordinationofoutofcourtrestructuring, developingdebtcounselingservicesandinformationcampaigns, taxincentivesforwriteoffs, developinganefficientmarketfordistressedassets, establishingreliabledataplatforms, transparencyandmodernizationofrealestatemarket, enhancingsupervision, fosteringcooperationamongpolicymakersandotherstakeholders.
Firstpolicyreaction =>Law4224/2013:GovernmentCouncilonPrivateDebtManagement 3
GDP and unemployment: critical factors for the augmentation of NPLsFactorshamperingtheresolutionofNPLs:
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TheroleoftheBankofGreece(1)
thesupervisoryperspectivetransparent+effective negotiation(BoGsStatute, art.55A+SSMReg.)(L.4224/2013)
ExecutiveCommitteeActNo.42
onarrearsandNPLsmanagement(May2014)
CodeofConductonarrearshandling
(August2014)
stability
CRR/CRDIV
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TheroleofBankofGreece(2)CRR/CRDIV:thebasisAsetofEUlawprovisionsalsoapplicabletoGreekbanksinfluencethewaytheinstitutionsdealwithtroubledassets:
increasedcapitalrequirementsforNPLs
reducedcapitalrequirementsforexposuressecuredbyimmovablepropertyprovidedthatspecificvaluationprinciplesarefollowed
lowerriskweightsforcoveredbonds
provisionsforsecuritization
increasedcapitalrequirementsforqualifyingholdingsoutsidethefinancialsector
leverageratio
ITSonSupervisoryreportingonforbearanceandnonperformingexposures
restructuringplans 6
TheroleofBankofGreece(3a)
ExecutiveCommitteeActNo. 42/2014:enhancedsupervisionatnationallevel.
Providingfor:AdoptionoftheEBAharmonizeddefinitionsforNPEsandForbearanceIndependentfunctionforNPEsmonitoringKPIstoevaluateefficiencyGuidelinesforportfoliosegmentation.Guidelines fordebtorsviabilityassessmentandsustainablerestructuringsolutions.Comprehensive reportingtotheboardandthesupervisor
Aimingat:Bettervaluationofcreditrisk (debtor+collateral)=>adequateprovisioningMonitoringtheefficiencyoftheconcludedrestructuringsolutions Moreoptionsforsalesandsecuritization
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TheroleofBankofGreece(3b)
CRR+ExecutiveCommitteeActNo. 42/2014
Potentialeconomiceffect
repairingcreditinstitutions balancesheetsdecreasingthecostoffundingreallocationofresourcestomorecredibleandproductivecompaniesrevitalizingrealestatemarket.
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TheroleofBankofGreece(4b)
CodeofConductonarrearshandlingCovering:
Bothnaturalandlegalpersons.
Aimingat:Onemore(andprobablythelast)chanceforsustainablerestructuringbeforeforeclosure.Motivatingmore innovativerestructuringsolutions.Establishingreliableproceduresforpropertyvaluation.Identifying(non)cooperating and(non)viableborrowers.
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howeverhowever
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NeitherExecutiveCommitteeActNo42northeCodeofConductmayimpose:solutionsforcommoncreditorswriteoffsbanonforeclosures
specificlawshavebeensettoaddresstheseissues:
L.4307/2014(knownasthelawfortheredloans)L.3869/2010(knownasKatselisLaw)L.4224/2013(knownasMoratorium)
L. 4307/2014Businessdebtsettlements(1)
Firstpillar:Taxincentivesforsettlements/writeoffsforNPLsEligibledebtors:professionals andsmallenterprises(turnover
L. 4307/2014Businessdebtsettlements(2)
ThepoolofMicroenterprisesinGreece
Source:EuropeanCommission2013SBAFactSheetGreece 13
L. 3869/2010:ahybridpersonalinsolvencylaw(1)
Covering: Naturalpersons(notfallingunderLaw4307/2014)inpermanentdifficultiesactingingoodfaith. Debtstoprivate entities.
LevelofprotectionSuspensionofallmeasuresandproceduralenforcementagainstthedebtorfromthedateofpetitionuntilthefinaljudicialjudgment.Mainresidencemaybeexcludedfromliquidationifspecificconditionsaremet.Possibledischarge ofdebts(once).
ProcedureinthreephasesDiscretionarymediationprocedure(attemptforoutofcourtsettlement).Attemptforincourtcompromise (>50%ofcreditorsagreementrequired).Judicialsettlement.
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()
L. 3869/2010(2) largebacklogofcases
Dateofpetition Dateforjudicialhearing
MagistratecourtRethymnon,Crete
30/12/2014 09/04/2030
TotalpetitionsunderLaw3869/2010
ofwhichpetitionstotheMagistratecourtofAthens
DecisionsoftheMagistratecourtofAthens
ofwhichaccepted
2010 2014 150.693 28.686 3.900 1.966Source:MagistratecourtofAthens
15Source:TEIRESIAS
L.4224/2013 (moratorium:expired31.12.2014.Tobeextended?)
Personscovered:Naturalpersonsandprofessionalsifspecificcriteriaaremet:
Annualfamilydisposableincome
HowtheCodecouldinteractwiththeotherrelevantlaws? Asamandatoryfirststageofnegotiation
Givingevidencetobeassessedbyacourton:thesituationandtheprospectsofthedebtorthedegreeofdebtors indebtednessthedebtors willingnesstocooperate
Facilitating commoncreditors solutionswhereestablishedbylaw Enhancinginstitutions discipline Fosteringcooperationculture
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RegulatoryframeworkfortransferringDistressedAssets(D.A.)
ThevendorssideThebuyers
side
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afterpriorapprovaloftheBoG
AfterpriornotificationtotheSSM
Nosupervision
WhocanbuyNPLs?
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PotentialnextstepsRegulatoryframeworkfornonbankfinancialinstitutions:
theproperlevel oftheregulation/supervision (focusingratheronmacrothanmicrorisks),
thenecessarylevelofconsumerprotection(information/behaviorpractices,fairtreatment/confidentiality).
AprivateorapublicAssetManagementCompany(AMC)?
Acentral orseveralSpecializedVehicles(securitization/servicing/restructuringofparticularportfolios)?
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AregulatoryframeworkforAMCKeyissues
Objectives/PotentialinteractionwithBankingRecoveryandResolutionDirectiveStatusofownershipoftheAMC=>risk sharingGovernance/strategySizeEligibilityofassetstobetransferredValuationofeligibleassetsConditionality(stateaidruling)Duration(welldefinedexitstrategies)Servicing/financingCompetitionEligibilityofAMCs bondsascollateralformonetarypolisy
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:
Isitenough?
Prioritization and speeding up othercomplementaryactions.
Fostering coordination among authoritiesandinstitutionsinvolved.
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ComingsoonEBAGLs:harmonizedpracticesinhandlingarrearsNewIFRS9:achievingmoreprudentandtimelyprovisioningbyexpectedlossmodel
Shadowbanking:aseriesofproposalsMortgageCreditDirective:valuationofresidentialimmovableproperty
EUgreenpaperforasinglecapitalunion:thoughtsforharmonizinginsolvencylaws
Securitization/SMEs: seekingalternativechannelsforfundingwhileensuringsoundriskassessmentanddiminishingconflictsofdifferentplayers
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Thankyouforyourattention!
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