BoG approves new Code of Conduct for NPLs

The central Bank of Greece (BoG) approved on Monday the new banking Code of Conduct for the management of non-performing loans (NPLs), expected to be shortly published in the government gazette.

The new Code of Conduct – which has not yet been revealed to the public – is the product of consultations between the Bank of Greece, the Hellenic Bank Association and consumer associations.

It establishes the general principles of the behaviour commercial banks and borrowers should exhibit, in order to seek alternative ways of servicing overdue bank debt or finalize its settlement, taking into account the circumstances surrounding every borrower. The new Code also provides for the steps, the deadlines and the minimum information content banks are obliged to disclose to their borrowers and vice versa. These procedures become more demanding in cases where the borrower is considered to be “uncooperative”, which can lead up to the auctioning of the borrower’s dwelling.

The Code also introduces an obligation for the banks to staff their NPL-managing departments with appropriately educated executives, while also organizing them in ways that banks may handle individually the case of borrowerw with overdue loans. Apart from distinguishing between “cooperative” and “uncooperative” borrowers, the Code also introduces the concept of “reasonable living expenses” for borrowers that are natural persons, not companies.

Regulations related to the Code of Conduct voted into law this month prevent banks from charging their borrowers with any fees related to the application of the Code, which is obligatory also for branches of foreign banks in Greece and for financial institutions. Although the Bank of Greece will not be mediating in any individual cases of dispute between banks and borrowers regarding the Code, it will be monitoring and regulating its application.