Clarification Note on the Purchase of Non-Financial NPLs by NPL Managers

SUPERVISORY PROVISIONS FOR THE MANAGEMENT OF NON-PERFORMING LOANS Clarification Note Purchase of non-financial credits by non-performing loan managers

This note provides clarification on the possibility for non-performing loan managers registered in the register referred to in Article 114.5 of the Banking Consolidation Law (TUB) (the Managers, hereinafter) to purchase non-financial distressed credits held against debtors in a state of insolvency, even if not judicially established, or in substantially equivalent situations (hereinafter, non-financial distressed credits).

Preliminarily, the following is recalled:

• The Managers exercise the activity of managing non-performing loans indicated in Article 114.1, paragraph 1, letter b) of the TUB; within this scope, they perform at least the activity of collecting and recovering payments due by the debtor (so-called servicing). Furthermore, pursuant to Article 114.3 of the TUB, they may perform: (i) out-of-court recovery activities for credits other than non-performing loans granted by banks and other subjects authorized to grant loans (Article 114.1, paragraph 1, letter a); (ii) connected and instrumental activities.
• The Supervisory Provisions for the Management of Non-Performing Loans (1) specify that Managers may perform the activity of managing non-performing loans purchased by them, definitively and for their own account, from banks and other financial intermediaries authorized to grant loans; however, this activity must be performed subordinately with respect to the management of non-performing loans on behalf of third-party buyers (2).

With this in mind, it is clarified that the Managers may perform – within the limits of subordination as stated above – the activity of managing non-performing loans purchased by them, definitively and for their own account, also from subjects other than banks and other financial intermediaries authorized to grant loans, provided that the conditions indicated by the Ministerial Decree of April 2, 2015, No. 53 in Article 2, paragraph 2, numbers 1 (ii), 2, and 3 are met. It is specified that, for the purpose of achieving the aforementioned subordination limit, the activity of managing non-performing loans purchased by the Manager, definitively and for their own account, from both banks or other financial intermediaries authorized to grant loans and from subjects other than the latter, is included.

(1) Provision of February 11, 2025, implementing the new Chapter II, Title V, of the TUB on the management of non-performing loans and Supervisory Provisions for the management of non-performing loans (Part One, Chapter 4, Section II). (2) This activity is considered subordinate to that of managing non-performing loans on behalf of third-party buyers if the value of the credits purchased definitively and for the Manager's own account, gross of value adjustments (Gross Book Value – GBV), is less than 50% of the total value of the non-performing loans managed, gross of value adjustments (i.e., the sum of the GBV of non-performing loans purchased for own account and those managed on behalf of third-party buyers).