GREECE Trends and Developments Contributed by: Paris Tzoumas, Zepos & Yannopoulos
Extension of Hellenic Asset Protection Scheme – “Hercules III” The Hellenic Asset Protection Scheme originally came into force in December 2019 under Greek Law 4649/2019 as a state-guarantee scheme for the senior notes of NPLs securitisations given a minimum credit rating by an independent rating agency and of which the mezzanine and junior notes are sold to third-party private investors to achieve accounting derecognition for the origi - nating credit institution. The Greek state guaran - tee for the senior notes of such transactions has been cleared by the EU Commission in terms of state aid, as the guarantee pricing (ie, the fee payable to the Greek State as guarantor) was based on a formula taking into account the gov - ernment’s credit default swap prices. The original HAPS program (HAPS I) was intro - duced for a maximum guarantee amount of up to EUR12 billion for a period of 18 months from the time of its introduction. In April 2021, HAPS was further extended (HAPS II) by a further 19 months to October 2022 with a renewed maxi - mum guarantee of up to EUR12 billion. More recently, at the end of 2023, the HAPS guarantee scheme was reintroduced by vir - tue of Greek Law 5072/2023, amending Greek Law 4649/2019 (the original HAPS statutory instrument), with an overall maximum amount available for guarantees set at EUR2 billion and applications from originating credit insti - tutions (wishing to benefit from the guarantee in relation to the senior notes held by them in the relevant NPL securitisations) being accept - ed until 31 December 2024. The reintroduced framework required a higher credit rating for the senior notes of the relevant securitisations (BB (high) or equivalent, as opposed to BB (low) or equivalent under the previous regime) and was purported to further reduce Greek banks’ stock
of NPLs, also enabling non-systemic banks such as Attica Bank and Pancreta to launch their own NPL securitisations under the revised HAPS III framework. In fact, at the moment of writing this piece, Attica Bank (having absorbed Pancreta) has applied for the HAPS III Guarantee in rela - tion to two NPLs securitisations. In addition, the Ministry of Finance has submitted an application to DG Comp for the further extension of HAPS III in terms of the maximum available guarantees amount from EUR2 billion to EUR3 billion but also its time extension from 31 December 2024 to June 2025. It is worth mentioning that under the HAPS I and II schemes, the Greek state guarantees provided in favour of the senior notes of NPLs securitisa - tions held by the originating banks amounted to EUR18.7 billion. Revamped framework for outright sales and servicing of loans and credits In late 2023, Greece introduced Law 5072/2023 on the sale and servicing of loan receivables. This was followed by decision No 225 of 30 January 2024 of the Bank of Greece on the terms and conditions for granting a licence, as well as a re-license, for new and existing servic - ing companies, respectively, under the law. The new law was transposed in Greece into Directive (EU) 2021/2167 on credit servicers and credit purchasers which harmonises the rules applica - ble to the sale, purchase and servicing of non- performing loans originated by EU banks. The Directive’s overarching objective was to support the development of a secondary market for non- performing loans in the EU while ensuring that the sale of loans does not undermine borrowers’ rights. Even before the introduction of Law 5072/2023, the outright sale and servicing of loans in Greece
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