Nearly three years after the European Banking Authority (EBA) issued new guidelines on the suitability of management bodies at credit servicers, the Bank of Greece has formally incorporated them into its supervisory framework. The EBA published the standards in December 2023, but Greece's central bank adopted them only days ago, extending tougher governance requirements to the country's fast-growing loan-servicing industry.
The new rules significantly raise the bar for board members and senior executives of companies that manage non-performing loans and other credit portfolios on behalf of banks and investors. Rather than relying primarily on academic qualifications or years of experience, supervisors will assess candidates based on the substance of their professional track record, including the nature of previous roles, the level of decision-making authority they exercised and the complexity of the organizations in which they served.
Board members will be expected to demonstrate both theoretical knowledge and practical experience across a broad range of disciplines central to the business of credit servicing. These include debt management and recovery, foreclosure, insolvency and bankruptcy procedures, consumer and borrower protection, data privacy, anti-money laundering controls, corporate governance, internal controls, contract law, accounting and the interpretation of financial statements.
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The framework also introduces a requirement for boards to be reassessed whenever material changes occur in a company's business model, regulatory environment or technological infrastructure. Supervisory reviews will apply the principle of proportionality, taking into account factors such as the servicer's size, workforce, assets under management, servicing mandates and reliance on outsourced activities.
Particular emphasis is placed on the collective suitability of the board rather than solely on the qualifications of individual directors. Boards must collectively possess expertise covering all of the company's core activities and risk areas, demonstrate the ability to identify fraud risks and ensure the fair treatment and protection of borrowers. Companies will also be required to document the integrity and fitness of their senior executives.
The decision further strengthens oversight of shareholders exercising qualifying holdings or direct and indirect control over servicing companies. Such investors will now be required to submit detailed questionnaires and supporting documentation to the Bank of Greece as part of the supervisory assessment.
The practical impact of the new framework will become clearer in the coming months as servicers review the composition of their boards against the stricter criteria. That process is expected to reveal whether the enhanced governance standards will trigger changes in board membership and, if so, how extensive those changes will be.
