Opinion of the European Central Bank of 13 January 2010 on restructuring of business and professional debts owed to credit institutions and on credit bureau data processing (CON/2010/8)
Date: 2010-01-13
Institutions: European Central Bank
Subjects: Greece, debt, financial solvency, financial stability, national law, redemption

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 January 2010  

on restructuring of business and professional debts owed to credit institutions and on credit bureau 

data processing 

(CON/2010/8) 

Introduction and legal basis 

On 23 December 2009 the European Central Bank (ECB) received a request from the Greek Ministry of 

Economy, Competitiveness and Shipping for an opinion on a draft law on the restructuring of business 

and professional debts owed to credit institutions, provisions governing credit bureau data processing and 

other provisions (hereinafter the ‘draft law’). On 29 December 2009 the Ministry submitted an addendum 

to its consultation request with some clarifications and additional information on specific aspects of the 

draft law.   

The ECB’s competence to deliver an opinion is based on Article 127(4) of the Treaty on the functioning 

of  the  European  Union  and  the  sixth  indent  of  Article 2(1)  of  Council  Decision  98/415/EC  of 

29 June 1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft law relates to rules applicable to financial institutions insofar as they 

materially  influence  the  stability  of  financial  institutions  and  markets.  In  accordance  with  the  first 

sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1.  

Purpose of the draft law 

1.1  According to its explanatory memorandum, the draft law serves as the starting point for the Greek 

Government’s  implementation  of  a  broader  strategic  plan  for  strengthening  the  market  and 

developing the economy. The draft law seeks to introduce measures intended to enhance liquidity 

in  the  market  by  supporting,  in  particular,  business,  professional  and  agricultural  activities.  The 

draft law is aimed at enabling natural and legal persons in economic distress, pursuing the above-

mentioned  activities,  to  restructure  their  overdue  debts,  thus  providing  liquidity  support  and 

ensuring  the  viability  of  their  activities  under  the  current  adverse  economic  circumstances. 

Moreover, on the basis of specific criteria, the draft law also provides for repayment arrangements 

in relation to debts that have not become overdue (performing debts). Furthermore, the draft law 

amends the existing legal framework on the recording and processing of credit bureau data in an 

effort to strike a balance between the availability of information on debtors, which is necessary for 

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                 
the  efficient  assessment  of  credit  risk,  and  the  unwarranted  exclusion  of  debtors  from  access  to 

credit necessary for the pursuit of economic activities. 

1.2  More specifically, under Article 1(1) of the draft law, natural and legal persons that have entered 

into loan or credit agreements with banks or other credit institutions for business, professional or 

agricultural purposes may apply to have their debts restructured if such debts have become overdue 
between 1 January 2008 and the date of publication of the draft law2. Article 1(4) of the draft law 

also provides for the restructuring of debts that have become overdue after 1 January 2005 under 
certain  conditions3.  In  accordance  with  Article  1(5)  of  the  draft  law,  applications  for  debt 

restructuring,  as  described  above,  must  be  submitted  by  15  March  2010,  with  credit  institutions 

being obliged to communicate to debtors the amount of the debt within 30 days following the date 

of submission of an application.  

1.3  Moreover, Article 2(1) of the draft law enables natural and legal persons that have entered into loan 

or credit agreements with banks or other credit institutions for business, professional or agricultural 

purposes to apply for any of the following measures in relation to performing debts, provided that 

they have no outstanding tax or national insurance liabilities and the conditions set out in Article 2 
of  the  draft  law  have  been  met4:  (i)  a  one-year  grace  period  with  a  respective  extension  of  the 

contractual term of the loan and capitalisation of interest on expiry of the grace period; (ii) a two-

year suspension of repayments of outstanding capital with a respective extension of the contractual 

term of the loan and payment of interest over the suspension period in accordance with the interest 

periodicity provided for in the agreement; or (iii) a three-year extension of the contractual term of 

the loan. In accordance with Article 2(4) of the draft law, applications for debt repayment must be 

submitted, also in these cases, by 15 March 2010.  

1.4  Article 3(1) of the draft law provides for the deletion of adverse data on repaid debts from records 

kept by or managed for the benefit of credit or financial institutions, provided that the relevant debt 

has already been or will be fully repaid within three months of publication of the draft law. In the 

same vein draft Article 3(2) lifts any restriction on issuing new cheque books imposed pursuant to 

2  

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Where the agreement has not been terminated, the restructuring requires that a debt be overdue for at least three months.  
Default interest and compound interest, less that already paid up to the date of entry into force of the draft law, will be 
deducted  from  the  total  outstanding  amount  subject  to  restructuring  and  will  be  written  off.  The  total  debt  subject  to 
restructuring may not exceed one million euro per credit institution and three million euro for all credit institutions. 
Such an option is possible, provided that by 15 April 2010 the debtor pays off a sum equal to 10 % of the resulting debt, 
excluding default interest and compound interest, for which separate accounts will be kept. If the debtor pays off half the 
debt in accordance with the arrangement, default interest and compound interest (less that already paid up to the date on 
which the draft law enters into force) will be written off. 
Under Article 2(2), the following persons may apply for the measures referred to in Article 2(1) where the outstanding 
 capital does not exceed EUR 250 000 per credit institution and EUR 1 million for all credit institutions: (i) natural and 
legal persons who keep category III books in accordance with the Code of Books and Records, have an annual turnover of 
less than EUR 2,5 million during the last financial year up to and including June 2009 and have incurred a loss during that 
financial  year;  and  (ii)  agricultural  cooperatives,  associations  of  agricultural  cooperatives  and  producers  groups, 
regardless  of  the  category  of  books  they  keep,  provided  that  the  conditions  set  out  in  (i)  above  are  met.  Under 
Article 2(3),  the  following  persons  may  also  apply  for  the  measures  referred  to  in  Article  2(1)  where  the  outstanding 
capital  does  not  exceed EUR  100  000  per credit  institution and  EUR  300  000  for  all  credit institutions: (i)  natural  and 
legal persons engaged in a commercial activity with a gross annual revenue of less than EUR 150 000 during the 2008 
financial  year;  (ii)    natural  persons  engaged  in  an  agricultural  activity  as  their  main  occupation;  and  (iii)  undertakings 
which have incurred substantial damages from fire or natural disasters between 2007 and the date of publication of the 
draft law.  

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Decision No 234/23/11.12.2006 of the Banking and Credit Committee of the Bank of Greece5 in 

relation to cheques that have been or will be paid within three months of publication of the draft 

law. With regard to credit bureau data processing, Article 4 of the draft law introduces changes to 

the  current  legal  framework,  in  particular  by  reducing  by  one year  the  current  maximum  periods 

during  which  such  data  may  be  kept  and  used  by  credit  or  financial  institutions  or  credit  bureau 
data  archives  in  relation  to  debts  that  have  been  fully  repaid6.  In  particular,  cheques  paid  within 

30 days of being returned to a drawer will not be recorded in the above mentioned archives, while 
those recorded will be deleted7. In relation to debts that have not been repaid, Article 4(4) of the 

draft law provides for the deletion of the relevant data ten years after such data have been recorded.  

1.5  Article  5  of  the  draft  law  introduces  the  obligation  for  credit  and  financial  institutions  that  have 

passed adverse debt data to lawfully operating credit bureau data archives to inform the person in 

charge  of  processing  such  data  within  two  working  days  of  obtaining  proof  of  debt  payment.  In 

addition,  Article  6  of  the  draft  law  states  that,  under  certain  conditions,  debtors  may  obtain 

provisional judicial protection by preventing registration of  credit bureau data in archives provided 

that it is deemed probable that an overdue debt does not exist.  

1.6  Article 7 of the draft law enables credit institutions to issue new cheque books while a restriction 

on issuing such books still applies, provided that a third party guarantor, namely a natural or legal 

person not subject to such restriction, guarantees up to EUR 5 000 for each cheque. Article 8 of the 

draft law provides for sanctions to be imposed by the Minister for the Economy, Competitiveness 

and Shipping in cases of infringement of the obligations under the draft law. Finally, Article 9 of 

the draft law addresses tax issues where the draft law entails writing-off claims of credit institutions 

in accordance with its provisions. 

2. 

Procedural and general observations 

2.1  Before introducing its specific comments on the draft law, the ECB wishes to draw the consulting 

authority’s attention to one procedural and several general observations. 

2.2  Procedurally, in cases of particular urgency that do not allow for a normal consultation period, the 

consulting  authority  may  indicate  urgency  in  the  consultation  request  and  ask  for  a  shorter  time 

limit  for  the  ECB’s  opinion  to  be  adopted.  This  does  not  prejudice  the  national  authorities’  duty 

under  Articles 127(4)  and  282(5)  of  the  Treaty  to  consult  the  ECB  on  national  draft  legislative 

provisions falling within its fields of competence in due course of the national legislative process. 

The second sentence of Article 4 of Decision 98/415/EC states that the ECB must be consulted ‘at 

an appropriate stage’ in the legislative process. This implies that the consultation should take place 

5  
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FEK 63B/2007. 
Under Article 4(1), such periods are reduced to two, three and four years depending on the three categories of payment 
facilities provided for therein. 
In  this  respect,  Article  4(5)  provides  that  from  the  point  in  time  when  such  cheques  no  longer  appear  in  the  relevant 
information records in accordance with the provisions of Article 4 of the draft law, the restriction on issuing new cheque 
books imposed pursuant to Decision No 234/23/11.12.2006 is lifted. 

3 

 
                                                 
at  a  point  in  the  legislative  process  that  affords  the  ECB  sufficient  time  to  examine  the  draft 

legislative  provisions  and  to  adopt  its  opinion  in  the  required  language  versions  and  which  also 

enables  the  relevant  national  authorities  to  take  the  ECB’s  opinion  into  consideration  before  the 

provisions are adopted. In this respect, it is worth recalling that, as noted by the Court of Justice, 

the  obligation  to  consult  the  ECB  under  the  Treaty  is  intended  ‘essentially  to  ensure  that  the 

legislature  adopts  the  act  only  when  the  body  has  been  heard  which,  by  virtue  of  the  specific 

functions that it exercises in the Union framework in the area concerned and by virtue of the high 

degree of expertise that it enjoys, is particularly well placed to play a useful role in the legislative 
process envisaged’8. Given that the consulting authority has indicated to the ECB that the draft law 

is  scheduled  to  be  voted  into  law  within  a  very  short  time  frame,  the  ECB  considers  that  the 

minimum  consultation  period  of  one  month  provided  for  in  Article  3(1)  of  Decision  98/415/EC 

applies. According to Article 3(4) of Decision 98/415/EC, Member States are obliged to suspend 

the  process  for  the  adoption  of  draft  legislative  provision  pending  submission  of  the  ECB’s 

opinion. This means that the adopting authority must have a real opportunity to consider the ECB’s 

opinion in a meaningful manner prior to taking its decision on the substance. 

2.3  The consulting authority views the draft law as containing one-off temporary measures of limited 

material scope, which should support liquidity for business, professional and agricultural activity. 

However,  the  ECB  notes  that  the  proposed  measures  could  have  a  negative  impact  on  market 

liquidity, especially against the backdrop of the current adverse economic conditions in Greece. In 

particular, a deterioration of these conditions could have systemic implications within Greece and, 
possibly, also cross-border effects9. Moreover, in key respects, some of the measures envisaged in 

the  draft  law  are  not  consistent  with  the  principle  of  an  open  market  economy,  as  reflected  in 

Article  3  of  the  Treaty  on  the  European  Union,  and  could  therefore  possibly  hinder,  rather  than 

support,  the  flow  of  credit  even  under  normal  market  conditions.  In  view  of  the  above,  the  ECB 

stresses  the  importance  of  thoroughly  assessing  beforehand  the  impact  of  the  draft  law  on  the 

capital adequacy and liquidity position of credit institutions, as well as its effects on the functioning 

of  the  financial  system,  so  as  to  safeguard  financial  stability,  promote  market  efficiency  and 

liquidity and support the adequate flow of credit to the economy.   

2.4  Moreover,  the  draft  law  applies  to  debtors  and  governs  their  relationships  vis-à-vis  credit 

institutions. Clearer formulations of the rights and obligations introduced by the draft law, as well 

as  a  careful  consideration  of  its  impact  on  existing  legal  relationships  between  creditors  and 

debtors,  are  necessary  in  order  to  ensure  legal  certainty,  avoid  undue  interference  with  the 

ownership  positions  of  credit  institutions  and  prevent  moral  hazard,  namely  the  creation  of 

incentives not to service debt in a timely manner. The potential moral hazard generated through the 

8  

9  

Case C-11/00 Commission of the European Communities v European Central Bank [2003] ECR I-7147, paragraphs 110 
and 111. 
Even  if  the  draft  law  only covered  the  Greek  branches  of  credit  institutions  domiciled  in  other  EU  Member  States,  its 
effects  could  extend  beyond  Greece,  requiring  credit  institutions  domiciled  in  other  EU  Member  States  to  make 
provisions  for  the  suspension  of  debt  repayment  envisaged  in  the  draft  law.  This  could  have  an  impact  on  financial 
stability in other EU Member States. 

4 

                                                 
proposed restructuring of currently performing loans could have serious adverse consequences on 

banks’ capital and liquidity positions, as well as on the overall cost of financing. 

2.5  Further  to  its  general  observations  in  paragraphs  2.3  and  2.4  above,  the  ECB  has  the  following 

specific comments to make on the draft law.  

3. 

Specific observations 

3.1  The ECB understands that Articles 1 and 2 of the draft law entitle debtors falling within its scope of 

application to benefit from restructuring arrangements in relation to overdue debts and performing 

debts, respectively, provided that the conditions set out therein are met. However, the ECB is of the 

view that the draft law should explicitly stipulate that debtors entitled to apply for the restructuring 

of their debts should prove their ability to repay such debts in accordance with the terms set out in 

the draft law. Indeed, restructuring a debt without the debtor’s proven ability to repay would only 

postpone the occurrence of default, thus increasing the level of credit risk in the financial system 

and impinging on the ability of credit institutions to fund the recovery of the economy as a whole. 

Moreover, from a legal certainty perspective, the ECB finds that the corresponding obligations on 

the part of the credit institutions in relation to the rights of debtors to apply for debt restructuring 

under Articles 1 and 2 of the draft law are not sufficiently clear and should be reformulated in the 

draft law in order to enhance clarity and reduce credit risk. 

3.2  Under  Article  1(4)  of  the  draft  law,  debtors  that  have  entered  into  loan  or  credit  agreements  in 
accordance with Article 1(1) thereof may, under certain conditions10, apply for the restructuring of 

debts  that  have  become  overdue  after  1  January  2005.  Without  prejudice  to  its  comments  in 

paragraph  2.4,  above,  the  ECB  suggests  including,  in  Article  1(4)  of  the  draft  law,  the  date  of 

31 December 2007 as the end-date for debts falling due after 1 January 2005, as this would clarify 

the  scope  of  the  draft  law  by  differentiating  between  the  two  categories  of  debt  subject  to 

restructuring, 

i.e.  (i)  debts 

that  have  become  overdue  between  1  January  2005  and 

31 December 2007, and (ii) debts that have become overdue between 1 January 2008 and the date 

of  publication  of  the  draft  law.  Furthermore,  the  inclusion  of  such  end-date  would  discourage 

perverse incentives that could result if debtors could avail themselves of the possibility to apply for 

the  restructuring  of  debt  becoming  overdue  following  the  draft  law’s  publication  and  up  to 

15 March  2010,  which  is  the  deadline  for  applying  for  debt  restructuring  for  both  categories  of 

debt.  

3.3.  Article  2  of  the  draft  law  enables  natural  and  legal  persons  that  have  entered  into  loan  or  credit 

agreements  with  banks  or  other  credit  institutions  for  business,  professional  or  agricultural 

purposes to apply for debt restructuring in relation to performing debts under certain conditions and 

for  the  amounts  set  out  therein.  In  this  respect,  the  ECB  would  like  to  draw  the  consulting 

authority’s  attention  to  the  potential  legal  uncertainty  risk  that  the  inclusion  of  securitized  debts 

10  

See footnote 3. 

5 

 
                                                 
into  the  scope  of  such  debt  restructuring  could  create,  encumbering  credit  institutions’  access  to 

securitisation markets to obtain liquidity and, consequently, the extension of credit to the economy.  

3.4  The ECB understands Article 3 of the draft law as being aimed at providing entrepreneurs that face 

difficulties  in  repaying  their  debts,  but  who  will  settle  their  debts  within  three  months  of 

publication of the draft law, the opportunity to continue their activity without being penalized on 

the  basis  of  adverse  data  records  on  their  economic  behavior.  However,  the  prospect  of  such 

information no longer being available to credit institutions would not be in line with best practice, 

and  could  affect  negatively  the  efficient  evaluation  of  debtors’  credit  risk,  by  encumbering  the 

ability of credit institutions to differentiate among debtors representing varying levels of risk. Τhe 

proposed  deletion  of  credit  history data  could,  in  short,  make  credit  institutions  more  cautious  in 

their  lending  and  increase  the  cost  of  financing  the  economy,  in  particular  of  the  firms  and 

households that service their debt. The same observations also apply to draft Article 4(1) on credit 

bureau data processing, which, inter alia, reduces by one year the current maximum periods during 

which  data  on  debts  that  have  been  fully  repaid  may  be  kept  and  used  by  credit  or  financial 

institutions or credit bureau data archives. The ECB would welcome an assessment of the effects of 

the proposed restrictions provided for in Article 3 and Article 4(1) of the draft law, also taking into 

account the practice in other Union Member States. 

3.5  Finally,  under  Article  7  of  the  draft  law,  read  in  conjunction  with  Article  3(2)  thereof,  credit 

institutions  may 

issue  new  cheque  books  while  a 

restriction  pursuant 

to  Decision 

No 234/23/11.12.2006 of the Banking and Credit Committee of the Bank of Greece on issuing such 

cheque books still applies, provided that a third party guarantor guarantees up to EUR 5 000 per 

cheque.  The  ECB  is  concerned  that  the  guarantee  of  EUR  5  000  per  cheque  may  not  suffice,  as 

cheques could be issued for amounts well above that level. Therefore, it is advisable that a debtor 

subject to the above-mentioned restriction is provided with a cheque book only if the full amount of 

the cheque is guaranteed. Furthermore, the creditworthiness of the guarantor as well as the relevant 

concentration  risk  should  be  assessed  when  providing  a  cheque  book  subject  to  a  guarantee. 

Finally, the ECB notes that, by lifting restrictions imposed pursuant to the aforementioned Decision 

adopted by the Bank of Greece in accordance with the regulatory powers conferred upon it by its 

statute,  the  proposed  arrangement  could  interfere  with  the  Bank  of  Greece’s  powers  and  with  its 

ability to adequately perform its relevant tasks. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 13 January 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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