The New Legal Framework for the Assignment and Management of Non-Performing Loans (NPLs)
The granting of credit is one of the structural pillars of the financial system and plays an essential role in economic development by enabling the financing of business and personal projects. This activity, predominantly carried out by credit institutions and financial companies, finds legal support in a complex European regulatory regime geared towards protecting depositors and the stability of the banking system.
However, a significant proportion of the credit granted is not repaid, leading to an increase in non-performing loans ( NPLs). The weight of these assets on institutions' balance sheets jeopardises their ability to finance the economy, weakens the financial system and highlights gaps in the existing legal framework, imposing the need for legislative intervention to ensure the efficiency of the secondary credit market (commonly known as the non-performing loan market), the protection of borrowers and the predictability of assignment operations.
In this vein, on 13 August 2025, the President of the Republic promulgated two structuring pieces of legislation:
(i) Bank Credit Assignment and Management Regime (RCGCB);
(ii) Central Credit Register (CRC).
I. The Bank Credit Assignment and Management Regime (RCGCB)
Until now, the assignment of credits was governed by the Civil Code and the general rules on the transfer of credits applied. In practice, this meant that investment funds and vehicle companies could acquire portfolios of NPLs without specific authorisation, governance and supervision requirements. However, the absence of an autonomous regulatory statute created grey areas, particularly with regard to the protection of borrowers and responsibility for the day-to-day management of credit.
Recognising this gap, and despite being late, the transposition of Directive (EU) 2021/2167 of the European Parliament and of the Council of 24 November 2021 substantially changes this paradigm, creating a harmonised framework on access to and exercise of the activity of credit management and credit assignment, as well as on the requirements applicable to credit purchasers.
The pillars of the RCGCB are:
(i) Emphasis on the principle of neutrality of the assignment, which guarantees that the borrower is not placed in a less favourable position simply because his credit has been transferred. In other words, the acquirer fully assumes the rights and duties of the original creditor, even if it is not a credit institution.
(ii) The professionalisation and compulsory outsourcing of credit management activities. Thus, whenever there is an assignment of an NPL, it will only be effective vis-à-vis the debtor if the assignee, in addition to notifying the debtor of the assignment, hires, in writing, an entity authorised to carry out the management of the contractual position acquired, in order to ensure tasks such as collection, renegotiation, information to the debtor and management of complaints. This requirement is supported by the European objectives of transparency and protection of borrowers, ruling out informal or aggressive recovery models.
(iii) Administrative authorisation, to be granted by the Bank of Portugal, to carry out the activity of credit manager, by verifying the governance, suitability and adequacy requirements of the members of the management bodies.
(iv) The duties attributable to assignors, assignees and credit managers, with regard to observing standards of diligence and care and competence in their relationship with each other and with the debtor.
Thus, the supervision of access to and exercise of credit management activity, as well as the assignment of credits arising from credit agreements, falls under the aegis of the Bank of Portugal, which is given enhanced powers, including ordering the dismissal of directors and prohibiting the exercise of management activity. In addition, the law enshrines a robust sanctioning regime, establishing three levels of administrative offences - light, serious and very serious - with fines of up to 1 million euros, the application of which can be combined with accessory sanctions, i.e. suspension of activity, similar to the regime currently in force in the banking sector.
II. Central Credit Register (CRC) regime
At the same time, a new CRC regime was approved, which modernises and extends one of the most important instruments for assessing the credit risk inherent in the decision to grant credit.
The purpose of the CRC is to centralise financial, accounting and risk information on credit liabilities arising from operations carried out by participating entities. Its operation and supervision are ensured by the Bank of Portugal.
The range of participating entities, which are subject to the duty of regular reporting to the Bank of Portugal, is now broader: in addition to credit institutions and financial companies, alternative credit investment organisations, crowdfunding service providers, credit managers acting in the name and on behalf of assignees, as well as foreign entities granting credit in Portugal under the European passport, are now part of the CRC.
With regard to access to information, participating entities can consult the centralisation relating to their clients and potential debtors, subject to the debtor's express consent in the case of a request from a credit manager. The borrowers themselves retain the right to access their data and to be informed whenever the refusal of credit is the result of information contained in the CRC.
Replicating the logic of the RCGCB, the CRC's penalty system systematises administrative offences into: very serious, serious and light, with fines ranging from 1,000 to 1,000,000 euros, applicable to natural and legal persons, without prejudice to ancillary sanctions, such as the publication of convictions.
In short, in a context where trust, transparency and regulation are crucial, these measures not only strengthen the financial system, but also redefine the environment in which companies and investors operate, providing an opportunity to professionalise and make the market more credible.
