A. Introductory remarks.
The Code of Conduct under Law 4224/2013 (codified), as applicable, lays down general principles of conduct and introduces best practices aiming at strengthening the climate of trust and enhancing exchange of information between borrowers and credit institutions, so that each party can weigh the consequences of alternative forbearance, resolution or closure solutions for loans in arrears, with the ultimate goal of working out the most appropriate solution for the case in question, by applying the relevant Arrears Resolution Procedure.
The Code of Conduct applies to individuals, professionals and small and micro enterprises (i.e. businesses with average annual below EUR1,000,000) with debts in arrears or increased likelihood of default.
II. Exceptions from applying the Code of Conduct
A) The Code of Conduct does not apply to the following:
- Claims arising from agreements that have already been terminated before 1.1.2015, unless the borrowers address, on their own initiative, the Dedicated Contact Point and request the implementation of the Code of Conduct, submitting the documentation required for an assessment of their repayment capacity.
- Claims against a borrower not exceeding any of the limits set out under points (aa) and (bb) below:
(aa) the amount of one thousand EUR (€1,000), if the borrower is a natural person, calculated as the total amount due by the borrower to the Bank;
(bb) the amount of five thousand EUR (€5,000), if the borrower is a legal person-micro enterprise, calculated as the total amount due by the borrower to the Bank.
Note: Where borrowers, on their own initiative, appear and submit the information required under the present Code of Conduct for an assessment of their repayment capacity, the Bank shall be obliged to assign such borrowers to Step 3 of the Arrears Resolution Procedure (ARP).
B) The Bank is under no obligation to initiate the implementation of the Code of Conduct nor has the right to suspend it, as specified by law, if:
- the borrower has applied for out-of-court debt settlement under Article 8(1) of Law 4738/2020 or the Bank has communicated to the borrower an invitation for out-of-court debt restructuring under Article 8(2) of Law 4738/2020 and for as long as the procedure shall last until terminated as unsuccessful for any reason whatsoever;
- a debt restructuring agreement has been signed, which is not subject to consent by the Greek State or a social security fund, and the Bank is a covered lender (i.e. bound by such agreement) or the agreement has effects on the Bank pursuant to Article 5(2) of Law 4738/2020;
- the borrower or the Bank or any other creditor has applied for the endorsement of an agreement on the restructuring of the borrower and such agreement is endorsed or concluded according to Article 41 of Law 4738/2020 or Article 103(5) of Law 3588/2007, as specified in Article 265(1.a) of Law 4738/2020, and such agreement is binding upon the Bank;
- the borrower or the Bank or any other creditor has applied for the declaration of the borrower in bankruptcy and until possible rejection of such application;
- the borrower has requested to become subject to the procedure envisaged by Law 3588/2007 or Law 3869/2010 or Law 4605/2019 or Law 4469/2017, and the request or a court decision or the procedure itself is pending, or if the borrower has become subject to the procedure provided for in Article 68 of Law 4307/2014, which is pending;
- Article 7(3)(e) of Law 4738/2020 applies;
- the borrower – legal entity is under liquidation; and
- there are claims against the borrower who is subject to legal debt enforcement proceedings initiated by third creditors.
Notes:
In case of re-initiation of the Code of Conduct after its suspension as above, the procedure under the Code of Conduct shall be resumed from the step it reached before the suspension, upon due adjustment of the data under assessment and, if applicable, of the proposed solution, if in the meantime significant changes have taken place that may affect the assessment of the long-term sustainability of the proposed solution.
Once the out-of-court debt settlement procedure has been terminated as unsuccessful for any reason whatsoever, the Bank shall initiate or resume the procedure under the Code of Conduct from the step it has reached before its suspension:
(a) either on its own initiative; or
(b) upon the debtor’s request, as specified by law.
If the Bank has carried out an assessment of the long-term sustainability of the solution, as envisaged in Chapter E.1 of Executive Committee Act 175/2/29.7.2020 “Adoption of the guidelines of the European Banking Authority on management of non-performing and forborne exposures (EBA/GL/2018/06) – Repeal of Executive Committee Act 42/30.5.2014 on the supervisory framework for the management of loans in arrears and non-performing loans (Government Gazette Β 1582)” (Government Gazette B 3550), this step shall not be repeated.
III. Implementation of the Code of Conduct –> Finding the appropriate debt settlement solution
The Bank of Greece’s Executive Committee Act 175/2020(hereinafter the Act), sets out the special framework of requirements for the management of exposures in arrears and non-performing exposures by credit institutions. The Executive Committee Act 175/2/29.7.2020 provides guidelines on the design and evaluation of sustainable types of forbearance solutions, so as to consider the current and future repayment capacity – as estimated on the basis of conservative and realistic assumptions – of each borrower, whether a natural or a legal person.
In this context, borrowers should follow the steps described below to find a viable solution . In any case, they should take actions within the specified time limits in order to be classified as cooperating borrowers. The assessment of the relevant requests under the Code of Conductshall also take into account the reasonable living expenses. For more information please read the Information Booklet for borrowers facing financial difficulties
You can read the updated Code of Conduct here.