Government Approves New Legal Regime for Bank Credit Assignment and Management
The Portuguese Government has published Decree-Law No. 103/2025, of September 11, in the official state gazette, Diário da República, formally transposing the European Union Directive 2021/2167 on credit servicers and credit purchasers. The new legislation establishes a harmonized national framework for the management and acquisition of non-performing loans (NPLs), aiming to foster the development of secondary markets for distressed debt and enhance the stability of the banking sector. The directive seeks to provide credit institutions with more effective tools to reduce NPLs on their balance sheets while ensuring that debtors' rights are protected throughout the assignment process, guaranteeing they are not placed in a less favorable position.
To implement the EU directive, the new decree-law approves the Regime for the Assignment and Management of Bank Credits (RCGCB), which also brings changes to the legal framework for credit securitization and the operation of securitization funds. Additionally, the law updates the regime governing the Central Credit Register, expanding the scope of information that is centralized. This comprehensive approach is designed to increase transparency and efficiency in the credit market. The RCGCB applies to the assignment and management of credit agreements granted in Portugal by a wide range of entities, including national credit institutions, financial companies, payment institutions, and branches of foreign institutions, as well as entities providing credit services from other EU member states.
A central element of the new legislation is the formal recognition and regulation of credit management as a professional activity. Under the new rules, any entity wishing to operate as a credit manager in Portugal must obtain prior authorization from the Bank of Portugal. This regulatory oversight is intended to ensure a high standard of professionalism and accountability in the sector. Authorized credit managers will be subject to a comprehensive set of duties, including acting with loyalty and respect for the interests of all stakeholders—debtors, credit institutions, and assignees—and performing their functions with diligence, care, and competence. This marks a significant step towards professionalizing the handling of distressed assets in the country.
The principle of 'neutrality of assignment' is a cornerstone of the RCGCB, ensuring that the sale of a loan does not negatively impact the debtor's legal position. To enforce this, the law mandates that the debtor must be formally notified of the credit assignment for it to be effective. Furthermore, it requires the hiring of a licensed credit management entity whenever legally stipulated. The assignee—the entity acquiring the credit rights—is bound by the same laws and regulations that applied to the original creditor. This includes all rules related to the credit agreement itself, as well as consumer protection, contractual, and criminal law. This provision ensures a seamless continuation of legal protections for the debtor, regardless of who owns the debt.
Need Expert Guidance?
Get personalized insights from verified real estate professionals, lawyers, architects, and more.
According to legal experts, this framework will bring much-needed clarity to the NPL market. Sofia Ribeiro, a partner at a leading Lisbon law firm, stated, 'The transposition of this directive is a pivotal moment for Portugal's financial ecosystem. By creating a regulated and predictable environment for NPL transactions, the government is signaling to international investors that Portugal is a mature and secure market for distressed asset investment. The mandatory authorization for credit managers by the Bank of Portugal will significantly raise the bar for service quality and accountability.' The law explicitly states that if a credit manager is contracted by the assignee, this manager must also adhere to all applicable legislation on behalf of the assignee, reinforcing the chain of responsibility.
The scope of the RCGCB is broad, also covering Alternative Investment Funds specializing in credit and the assignment of credits for securitization purposes. This ensures that the new rules permeate various levels of the financial market where distressed debt is handled. The Bank of Portugal is expected to release further technical regulations detailing the authorization process and ongoing supervision requirements for credit managers in the coming months. This move is anticipated to streamline the reduction of NPLs held by Portuguese banks, a key objective for ensuring long-term financial stability and freeing up capital for new lending to the economy.
Navigate Portuguese property regulations with expert guidance at realestate-lisbon.com.