Part One

Supervisory Provisions for NPLs servicers

Authorisation

Conditions

a. incorporation as joint-stock company (Società per Azioni), partnership limited by shares (società in accomandita per azioni), limited liability company (Società a responsablità limitata), or cooperative company;

b. the registered office and main offices (direzione generale) are located in the Republic of Italy and at least a part of debt collection and recovery activity is carried out in Italy;

c. existence of the prerequisites for the granting of the authorisation provided for Article 19 of the Consolidated Law on Banking for holders of qualifying holdings, in accordance with Article 114.13(1) and (3) of the Consolidated Law on Banking;

d. possession by corporate officers of suitability requirements, in accordance with Article 114.13(2) of the Consolidated Law on Banking;

e. the submission of a programme concerning the initial activity and organisational structure, corporate governance arrangements, administrative and accounting organisation and internal controls, policies and procedures to ensure compliance with the general principles set out in Article 114.8 of the Consolidated Law on Banking and the applicable provisions on the protection of debtors;

f. in case of holding of funds received from the debtors of the serviced receivables, the submission of documentation attesting the adoption of the measures for the protection of the debtor’s funds provided for in the Supervisory Provisions;

g. the limitation of the corporate purpose to the NPLs servicing referred to in Article 114.1(1)(b) of the Consolidated Law on Banking and to the extrajudicial recovery of loans other than those referred to in Article 114.1(1)(a), without prejudice to the possibility to perform related or instrumental activities as well, in compliance with the conditions set forth under the Supervisory Provisions.

Programme of activities

The directors shall prepare a programme for the initial activity relating to the NPLs servicing, which shall contain at least:

I. the description of the lines of development of operations,

II. a forecast report on technical profiles and income and financial adequacy, and

III. a report on the organisational structure.

Detention of debtors’ funds

It is provided that entities applying for authorisation as NPLs servicer and intending to receive and hold debtors’ funds for the purpose of transferring such funds to NPLs purchasers shall adopt the organisational safeguards for the protection of debtors’ funds set forth in the Supervisory Provisions (Chapter 4).

Capital participants

Persons holding, even indirectly, qualifying participations in a NPLs servicer must meet the fit and proper requirements and meet the propriety criteria laid down in Article 25 of the Consolidated Law on Banking and its implementing provisions.

The Bank of Italy assesses that the structure of the group to which the NPLs servicer belongs does not affect the effective of supervision over it.

Authorisation for newly established companies

The Supervisory Provisions provide for rules on the authorisation of NPLs servicing activities for newly incorporated companies.

Authorisation of existing companies

The Supervisory Provisions provide for rules on the authorisation of NPLs servicing activities for already incorporated companies

Authorisation of financial intermediaries wishing to operate in the EU outside Italy

The Supervisory Provisions provide for rules on the authorisation of NPLs servicing activities for financial intermediaries intending to provide services in the EU outside Italy.

Expiry and revocation of authorisation

The authorisation expires if the operator renounces or does not make use of the authorisation within 12 months from the date on which it is granted.

The authorisation is revoked, inter alia, when the operator:

· no longer fulfils the conditions for the granting of authorisation

· ceased providing the activity for a continuous period of more than 12 months;

· obtained the authorisation by making false statements or by any other irregular means.

Register of NPLs servicers

The register of NPLs credit servicers contains:

· the list of Italian NPLs servicers and Italian branches of NPLs servicers established in other EU states;

· the information required by the EBA Guidelines on the Establishment and Maintenance of National Lists or Registers of Credit Servicers under Directive (EU) 2021/2167 (EBA/GL/2024/02).

The registration of Italian NPLs servicers takes place upon the conclusion of the procedure required for the granting of authorisation by the Bank of Italy. Subsequently, NPLs servicers notify the Bank of Italy the start of the operations.

Capital participants and corporate officers

In line with the Decree:

· persons who – alone or in concert – intend to acquire directly or indirectly, in any capacity whatsoever, qualifying holdings in the capital of NPLs servicers are subject to the provisions of the Consolidated Law on Banking for purchasers of qualifying holdings in the capital of banks;

· the requirements of good repute and professionality, as well as the criteria of competence and propriety, pursuant to Article 26(3)(a), (b), (c), (d) and (f), (5) and (6), apply to the corporate officers of the NPLs servicers.·

Permitted activities

The activities that can be performed include:

· the activities performable by NPLs servicers and other activities permitted to them by law;

· related and instrumental activities;

· provisions implementing Article 114.7 of the Consolidated Law on Banking the receipt and holding of funds received from debtors;

· specific organisational requirements regarding investments in real estate assets by NPLs credit servicers.

Administrative and accounting organisation and internal controls

The principles of corporate governance and control to be complied by the NPLs servicers must comply are identified under the Supervisory Provisions. In particular the latter provides with:

· the characteristics, tasks and organisational requirements of the governing bodies (administrative body and supervisory body) of the NPLs servicers;

· the obligation for the NPLs servicers to provide for a system of internal controls aimed at ensuring the proper conduct of the NPLs servicing;

· the outsourcing of NPLs servicing activities;

· the requirements and characteristics of the information systems to be adopted by the NPLs servicer;

· certain organisational principles relating to specific activities, concerning, in particular, the contractual relationship between the NPLs servicer and the NPLs purchaser and the NPLs servicing activity.

Operations in Italy and abroad

The Supervisory Provisions provides with:

· the conditions and procedures for the establishment of branches in Italy by NPLs servicers;

· the conditions and procedures for the provision of services, with or without the establishment of branches, in foreign states (EU and non-EU) by Italian NPLs credit servicers, and

· the procedure for the provision of services, with or without the establishment of branches, in Italy by EU servicers.

Supervisory inspection

The Supervisory Provisions regulate the activity of inspecting servicers operating in Italy, specifying how inspections are to be carried out and the delivery of the results of such activity

Communications to the Bank of Italy

In view of the application to the NPLs servicer of the obligation to notify the Bank of Italy of regulatory misconduct or violations, the Supervisory Provisions include the relevant rules which impose an obligation to notify the supervisory body, as well as the persons entrusted with the statutory audit of the accounts of the NPLs servicer.

Relevant Transactions

The obligation of prior notification to the Bank of Italy of certain transactions relevant to the NPLs servicing is provided for, and in particular related to the intention to:

· carry out transactions involving the sale or acquisition of going concerns, assets and legal relations that can be identified as a pool (in blocco);

· carry out merger or demerger transactions;

· amending the articles of association by affecting relevant aspects of the company’s organisation (e.g., changes to the corporate governance model);

· significantly amend the manner in which the recovery activity is carried out;

· start or discontinue one or more of the activities communicated at the time of authorisation;

· creation of earmarked assets (patrimoni destinati).

Supervisory monitoring (information)

Pursuant to the information supervisory powers provided for in Article 114.11(1) of the Consolidated Law on Banking vis-à-vis the NPLs servicers, the latter are required to:

· send the Bank of Italy half-yearly supervisory reports on loans under management with the following information:

(a) the LEI code of the NPLs purchaser or, where applicable, of its designated representative; in the absence of the LEI code, the identification data of the NPLs purchaser or of the members of the management or administrative body of the NPLs purchaser and of the persons holding qualifying participations in the capital of the NPLs purchaser or, where applicable, of its designated representative within the meaning of Article 114.3(3) of the Consolidated Law on Banking;

(b) the address of the NPLs purchaser or, if applicable, of its designated representative;

(c) the amount of receivables or contracts managed during the six-month period of reference;

(d) the number and amount of credits managed and contracts managed, indicating those to consumers and those guaranteed and not, and the type of guarantees, if any;

(e) the trend of recoveries;

· periodically disclose the exposures of debt buyers to assigned debtors and the names associated with those exposures, in accordance with the provisions concerning the functioning of the Central Credit Register;

· attach a report on the organisational structure according to a certain scheme to the application for authorisation and ensure that it is constantly updated;

· transmit to the Bank of Italy the minutes of the shareholders’ meeting concerning amendments to the articles of association and other events of particular relevance to the company’s business;

· transmit its balance sheet to the Bank of Italy.

Certain provisions are applicable to financial intermediaries enrolled in the register provided for in Article 106 of the Consolidated Law on Banking authorised to service NPLs on behalf of NPLs purchasers in EU States other than Italy.

It is envisaged that the Supervisory Provisions on Administrative Sanctions and Penalty Procedure of 18 December 2012, as amended and supplemented from time to time, will apply to the procedures relating to the application of administrative sanctions to NPLs servicers.

Part Two

Provisions applicable to other financial entities

Provisions applicable to banks and financial intermediaries for NPLs servicing

Banks and financial intermediaries enrolled in the register provided for in Article 106 of the Consolidated Law on Banking that perform NPLs servicing activity on behalf of NPLs purchasers (persons for whom the provisions on the purchase and NPLs servicing and NPLs servicers set forth in Chapter II of Title V of the Consolidated Law on Banking do not apply) are subject to certain disclosure obligations, including:

· the obligation to provide potential purchasers of claims with the information specified in the Implementing Regulation (EU) 2023/2083, as specified in the Supervisory Provisions;

· the obligation to notify to the Bank of Italy and to the European Central Bank, on a six-monthly basis and in the manner established by the latter, at least the following information:

(a) the LEI code of the NPLs purchaser or, where applicable, of the designated representative; in the absence of the LEI code, the identification data of the NPLs purchaser or of the members of the management or administrative body of the NPLs purchaser and of the persons holding qualifying participations in the capital of the NPLs purchaser or, where applicable, of its designated representative;

(b) the address of the NPLs purchaser or, if applicable, of its designated representative;

(c) the amount of receivables or contracts assigned during the six-month reference period;

(d) the number and amount of credits assigned and contracts assigned, indicating those to consumers and those guaranteed and not, and the type of guarantees, if any.

The application of certain organisational rules concerning the risk management process of NPLs introduced by Part One of the Supervisory Provisions are also extended to banks and financial intermediaries.