Portugal Implements New EU Directive on Bank Loan Management, Regulating NPL Market
The Portuguese government has officially published Decree-Law n.º 103/2025, of September 11, a significant piece of legislation that transposes the European Union's directive on credit servicers and credit purchasers into national law. This new legal framework establishes a harmonized and regulated environment for the sale and management of non-performing loans (NPLs), a move intended to bolster the secondary market for bank debt and enhance the stability of the financial sector.
The new law directly implements Directive (EU) 2021/2167, which was designed to create a common European framework for entities that purchase and manage distressed credit portfolios from banks. The primary objective is to provide credit institutions with a more efficient mechanism to reduce their levels of non-performing assets, while simultaneously ensuring that the rights of debtors are protected throughout the process. The legislation introduces the Regime da Cessão e Gestão de Créditos Bancários (RCGCB), which governs the assignment and management of bank credits.
Under the RCGCB, the activity of 'credit management' is now formally designated as a regulated activity requiring prior authorization from the Banco de Portugal. Any entity, or 'gestor de créditos,' based in Portugal that wishes to service a portfolio of non-performing loans on behalf of a credit purchaser must now be licensed and supervised by the central bank. This introduces a new layer of oversight to a market that previously operated with fewer specific regulations. These authorized managers are bound by a set of professional duties, including acting with loyalty, diligence, and competence, and respecting the interests of debtors and credit purchasers alike.
A cornerstone of the new decree-law is the explicit protection of debtors through the 'princípio da neutralidade da cessão' (principle of neutrality of the assignment). This legal guarantee ensures that a debtor is not placed in a less favorable legal or contractual position following the sale of their loan from the original bank to a new entity. For the transfer of the credit to be legally effective, the debtor must be formally notified. The law mandates that the purchaser of the credit, known as the 'cessionário,' is subject to all the same laws and regulations that applied to the original creditor, including consumer protection laws and the original terms of the credit agreement.
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The scope of the new regime is extensive, applying to credit agreements granted by a wide range of financial entities in Portugal, including credit institutions, financial companies, and payment institutions, whether they are headquartered in Portugal or operating through a local branch. It also applies to credits held by Organismos de Investimento Alternativo de Créditos (OIA de créditos), a type of alternative investment fund, and to credits assigned for the purpose of securitization. The legislation also brings changes to the regime for credit securitization funds and updates the reporting requirements for the Central de Responsabilidades de Crédito (Central Credit Register).
The establishment of this regulated framework is expected to increase transparency and confidence in the Portuguese NPL market. For institutional investors and funds that specialize in acquiring distressed debt, the law provides clear rules of engagement and a supervised structure for managing these assets. By formalizing the roles and responsibilities of credit purchasers and servicers, the government aims to foster a more mature and liquid secondary market, which is seen as crucial for the health of the banking system and its capacity to support the broader economy, including the real estate sector.
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