Loan transfers and portfolio sales around the world - DLA Piper Investment Rules of the World

This tool offers you the chance to see how jurisdictions compare for finance and investment around the world. Please select your country and legal topic area(s) of interest using the drop down menu on the left hand side of the page.

Loan transfers and portfolio sales

What are the main considerations when transferring a loan and related security?

Angola

Make sure that the initial agreement does not prohibit any form of transmission.
The effectiveness of the assignment is dependent on notification to the debtor.
Obey the legal form of the business that serves as the basis.
The assignment of mortgage credits when not made in a will and the mortgage falls on real estate to be made by public deed.

The credit that is the subject of assignment must comply with the following requirements:

it must have a pecuniary nature;
it must be unconditional;
it cannot be litigious; and
it cannot have been given as a guarantee or collateral.

The assignment of credits, since it is subject to the general regime of legal business, may be the object of the means of preserving the equity guarantee provided for in arts. 605 and following of the Civil Code. Consequently, it can be contested by the creditor of the assignor, in the exercise of their right of action.

In addition, the requirements and effects of the assignment between the parties are defined according to the type of business on which it is based.

The assignment may not occur when it is prohibited by law or agreement of the parties and the claim is, by the very nature of the benefit, linked to the person of the creditor.

Australia

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often considered in the due diligence undertaken by the seller's legal advisors. Some of the key issues are:

Confidentiality: whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
Data protection: whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser (in particular, the Privacy Act 1988 (Cth) and the National Credit Code should be considered);
Lender eligibility – whether there are any restrictions considering the type of entity to which the loan may be transferred;
Undrawn commitments: whether there are any continuing obligations for further funding or other material obligations of the lender that may bind the transferee or reduce claims made by the transferee;
Transfer mechanics: whether there are any steps that need to be taken to transfer the loan in accordance with its terms;
Consent: whether a transfer requires the consent of, or notification to, any other parties; and
Voidable transactions: if the seller is insolvent, whether certain transactions may be declared voidable under the Corporations Act 2001 (Cth).

Belgium

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise by the seller's legal advisors. Key considerations include the following.

Notification

A transfer via cession is valid and enforceable against third parties following the agreement between the lender and the transferee. However, the borrower needs to be notified or has to acknowledge the cession.

Transfer security interest - novation

In case of a transfer by way of novation, all security rights relating to the initial debt are extinguished, unless explicitly preserved. A clause containing this preservation can be included in the original facility agreement.

Transfer security interest – cession

In principle, all security rights that have been put in place in connection with the transferred debt are automatically transferred. However, for each transfer of (part of) a loan secured by a mortgage, a marginal note (kantmelding/inscription marginale) in the Mortgage Registry must be made, which will involve the payment of a 1% registration tax (calculated against the secured amount) unless the transfer is made between certain categories of lenders (such as an EEA-licensed credit institution or mobilisation institutions).

Confidentiality

Consider whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser.

Data protection

Consider whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser.

Lender eligibility

Consider whether there are any restrictions around the type of entity to which the loan can be transferred.

Undrawn commitments

Consider whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee.

Transfer mechanics

Consider whether there are any steps that need to be taken to transfer the loan in accordance with its terms.

Consent

Consider whether a transfer requires the consent or notification of any other parties.

Brazil

There are a number of issues to consider before transferring a loan or a portfolio of loans. These issues are often covered as part of a due diligence exercise. Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

In addition, Resolution No. 3,533 from the National Monetary Council (CMN) dated 31 January 2008, provides changes to the manner in which assigned credit rights are to be treated in the books of financial institutions (pursuant to CMN Resolution No. 3,809 of 28 October 2009). In accordance with Resolution No. 3,533, if the assignor substantially retains the risks and benefits of the assigned credits, such credits may not be recorded as off-balance sheet loans. This provision is applicable to:

assignments with repurchase commitments;
assignments in which the assignor undertakes the obligation to compensate the assignee for losses; and
assignments made jointly with the acquisition (or subscription) of subordinated shares in FIDCs by the assignor.

Canada

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise by the seller’s legal advisors. Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent and notification – whether a transfer requires the consent or notification of any other parties.

Chile

General rules regarding the transfer of agreements must be fulfilled, so the transfer can effectively operate, otherwise, the transferor shall remain liable for the loan.

Regarding novation, please consider that a new obligation is generated; therefore, the previous existing guarantees will not be effective any more, unless expressly stated by all parties.

In addition, there are usual contractual clauses that need to be considered and addressed properly such as transfer mechanics and representations and warranties among others.

Colombia

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of the debtor or of any other parties.

Czech Republic

There are a number of issues to consider before transferring a loan (or portfolio of loans) and related security. These issues are often covered as part of a due diligence exercise by the seller's legal advisors. Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

Finland

There are a number of issues to be considered before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise by the seller's legal advisors. Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms;
consent – whether a transfer requires the consent or notification of any other parties;
lender's position – according to Finnish law, the transferee of a loan will not obtain a better position towards the borrower than the original transferor (thus, to the extent the borrower may present claims against the original lender, it may also present such claims against the new lender);
security – whether the loan is covered by guarantee or other security (Finnish law does not recognize an assignment of security. However, under Finnish law, secured loans can be transferred and the general rule is that, as an ancillary obligation, the guarantee/security associated with the loan is transferred together with the debt which is typically expressly permitted under the financing documents.); and
syndicated loans – usually, a security agent is appointed to act for and on behalf of all lenders (no further actions, other than notices in the loan documents, are usually required to transfer the benefit of the security if the composition of the bank syndicate changes).

France

The main considerations in connection with a transfer of loan include:

consent/notification – whether a transfer requires the consent or notification of any other parties;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
confidentiality and banking secrecy – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser; and
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser.

Germany

assignability – whether the loans and security can be transferred or are subject to contractual or legal restrictions;
registration of land charges – whether land charges (if this type of security is part of the security package) are duly registered and serve the correct security purpose;
parallel debt – if the loan and security can be independently demanded by a security trustee, whether a valid parallel debt structure is in place that secures accessory security against extinguishment if transfers of the loan have to be made under a different jurisdiction's law, for example novation under English law;
confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions regarding the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps required to be taken in order to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

Ghana

The main considerations for transferring a loan and related security are whether:

the underlying contract allows for such transfer;
the consent of the borrower or any other party is required for such transfer;
there are limitations on the financial institution(s) to whom the loan and related security may be transferred;
there are any stamp duty implications;
the transfer will prejudice the borrower; and
there are any formalities that need to be adhered to for the transfer of a loan and related security.

Hungary

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

Ireland

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise by the seller's/buyer’s legal advisors.

Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms;
consent – whether a transfer requires the consent or notification of any other parties. Under the Central Bank's Code of Conduct on the Transfer of Mortgages, a loan secured by a mortgage of residential property may not be transferred without the written consent of the underlying debtor. However, the relevant consent is often obtained under the mortgage origination documentation (which should be checked to confirm on a case-by-case basis);
notice of assignment – in order for a legal assignment to be effective, a notice of assignment must be given under the Supreme Court of Judicature Act 1877 to the underlying debtor, notifying them that the loan has been assigned. The notice serves to inform the debtor to whom he must repay the loan;
perfection formalities – whether the underlying security is preserved in favor of the new lender and whether any perfection formality is needed for the transfer to be enforceable (in addition to the service of a notice of assignment under the Supreme Court of Judicature Act 1877);
regulatory requirements – whether the assignee is required to be registered as a credit servicing firm pursuant to the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (as amended); and
tax – whether taxes apply. A transfer of a loan by way of novation should not give rise to stamp duty. However, in limited circumstances, stamp duty might arise on the acquisition of a loan by way of assignment.

Italy

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercised. Some of the key considerations include:

authorization requirements – lending activity (including the purchase of receivables) is a reserved activity and the transferee/assignee must be duly authorized (in case the investor is not authorized to carry out such activities in Italy, a securitization structure can be used); in relation to the assignment/sub-participation schemes, it is noteworthy to highlight the strict approach very recently locally adopted by the Italian Supreme Cassation Court (criminal law division); in the context of a proceeding against a foreign bank accused of providing lending activity in Italy without authorization, the Court has in fact identified a set of symptomatic elements based on which it could be concluded that a fictitious structure has been put in place with the exclusive aim of concealing the lending activity carried out by a non-authorized entity. These symptomatic elements include, inter alia: (i) allocation of the default risk also on the unauthorized entity and not only on the authorized entity; (ii) independent credit risk assessment formulated by the foreign non-authorized entity; (iii) awareness of/disclosure to the borrower of the agreements concluded between the authorized and the unauthorized entities; (iv) possibility, for the foreign non-authorized entity, to interfere in the implementation of the relationship with the borrower; (v) greater commitment of the foreign unauthorized entity in terms of exposure with the borrower;
tax aspects – the tax implication of the assignment/transfer must be evaluated on a case by case basis;
confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms;
consent and notification – whether a transfer requires the consent or notification of any other parties (as indicated above, notice of the assignment (or, in the event of an assignment as a pool and provided that Article 58 of the Consolidated Banking Act applies, publication on the Official Gazette and in the competent register of the companies house) is generally required); and
acknowledgment of security – an acknowledgment of the security is generally needed (depending on the kind of security, notarization and registration of the acknowledgement deed(s) may be needed).

Ivory Coast

Loans contracted by residents from non-residents must, except by special decision of the Minister of Finance, be carried out through licensed intermediaries in all cases where the monies borrowed are made available to the borrower in the country. The licensed intermediaries thus called upon to intervene will ensure that the transactions comply with the applicable laws and regulations.

All foreign loans are subject to mandatory declaration to the External Finance Directorate and the BCEAO, for statistical purposes. The repayment of any foreign loan, either by purchase and transfer of foreign currencies or by crediting foreign accounts in XOF or in EUR, must be declared for statistical purposes to the External Finance Directorate and the BCEAO and said transactions must be carried out through a licensed intermediary.

Before transferring a loan, a number of issues, below, must be taken into account:

Confidentiality: whether disclosure of information relating to the loan is allowed, to a potential transferee for instance.
Data protection: whether there is any personal or restricted data or information in the loan that should not be disclosed.
Lender eligibility: whether there are any restrictions on potential transferee entities.
Undrawn commitment: whether the transferee will be subject to continuing obligations for further funding or reduction of claims.
Transfer mechanics: whether there are any procedures to be followed for the transfer.
Consent: whether the consent or notification of any other parties is required for the transfer.

Japan

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise. Some of the key considerations include:

confidentiality – whether the seller is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
undrawn commitment – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the purchaser or reduce claims made by the purchaser;
transfer mechanics – whether there are any steps that must be taken to transfer the loan such as obtaining the consent of the borrower, a third party or both;
security – whether the security is properly transferred to the purchaser (for example, a transfer of a revolving mortgage before the principal is fixed requires the mortgagor's consent);
perfection – whether the transfer is perfected by way of notice or acknowledgement or by a registration of the assignment of the claim (in the case of a registration, the assignment is perfected against third parties at the time of the registration, while it is not perfected against the debtor until the registered matters are notified to or acknowledged by the debtor); and
allocation of repayments – the allocation of repayments between the seller and the purchaser depends on whether the borrower's payment obligations accrue before or after the base date (which could be the date of the loan transfer) or if the borrower's payments are actually made before or after the base date (the latter is often used for a transfer of problematic loans).

Luxembourg

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise by the legal advisors. Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its term;
consent – whether a transfer requires the consent or notification of any other parties; and
preservation of security/perfection formalities – whether the underlying security is preserved in favor of the new lender and whether any perfection formality is needed for the transfer to be enforceable.

Mauritius

The main considerations are as follows:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms;
registration – the costs associated with the registration of such a transfer; and
consent – whether a transfer requires the consent or notification of any other parties.

Mexico

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

Morocco

The main considerations to be taken into account when transferring a loan are as follows:

the consent of the parties;
eligibility of the lender;
formalities of enforcement;
confidentiality;
protection of personal data;
banking monopoly.

Netherlands

In order to affect a ‘transfer of entire contractual position, the consent of all the parties to the agreement is required if not given in advance.

Bankers liens are commonplace in the Netherlands whereby a bank takes security for all present and future obligations of a debtor. While these types of security can prove useful for the purposes of cross collateralization (and cross acceleration), careful structuring is required if loan portfolios are transferred to transferee lenders whilst the transferor lender still has the benefit of bankers liens (which, if not terminated appropriately, can give the transferor lender the benefit of the relevant security for new claims it originates on the debtors concerned).

New Zealand

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent of or notification to any other parties. Unless the debtor is notified of the assignment, the debtor can still repay the assignor and be released from the debt despite the assignment to the assignee.

Norway

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

Peru

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise by the seller's legal advisors.

Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties or, if applicable, authorization of the Superintendence of Banking, Insurance and Private Pension Fund Management Companies (SBS).

Poland

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions concerning the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall upon the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent of or notification to any other parties.

Portugal

confidentiality – whether the seller of the loan can disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

Puerto Rico

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser;
lender eligibility – whether there are any restrictions around the type of entity to which the loan can be transferred;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee or reduce claims made by the transferee;
servicing obligations and fees – a sale of a pool of loans is usually subject to servicing and servicing fees;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms; and
consent – whether a transfer requires the consent or notification of any other parties.

Romania

Recent legislative developments brought some changes to the legal regime applied to the transfer of loans, including on the consumer-lending side. Before 30 September 2016, the rule provided by law was that portfolios of loans originated by financial institutions could be acquired only by regulated entities (eg credit institutions, non-banking financial institutions and payment services providers (granting loans related to the payment services)). However, such rule did not apply if the loans were deemed as ‘losses’ within the meaning of Romanian regulations regarding credit classification.

After 30 September 2016, such legal provisions were expressly repealed and we are currently lacking an express legal provision dealing with acquisition of loans in general. However, the National Bank of Romania has recently issued a communication stating that, to the extent the activity to be performed by the acquirer of loans in relation to the acquired loans represents crediting activities performed on a professional basis, the acquirer must be a regulated entity. Further, the National Bank of Romania concluded that the acquisition of loans granted to individuals and legal entities, which are deemed as ‘losses’ within the meaning of Romanian regulations regarding credit classification, does not represent a crediting activity performed on a professional basis and, therefore, can also be performed by other persons than regulated entities.

Further, specific rules regarding the acquisition of consumer loans (including non-performing loans) are provided by law.

In addition, various other issues may need to be considered in the context of transferring a loan or a portfolio of loans, the potential limitations being usually revealed in the course of the due diligence process conducted in such loans acquisition deals. Some of the key considerations include:

confidentiality – whether the seller of the loan is allowed to disclose information relating to the loan to a potential purchaser;
data protection – whether there is any personal data or other restricted information in the loan that should not be disclosed to a potential purchaser or whether additional measures might need to be implemented in order to ensure compliance with data privacy limitations;
undrawn commitments – whether there are any continuing obligations for further funding or other material obligations on the part of the lender that may fall on the transferee;
transfer mechanics – whether there are any steps that need to be taken to transfer the loan in accordance with its terms;
consent – whether a transfer requires the consent or notification of any other parties; and
formalities in relation to the security – in case of secured loans, additional formalities regarding security interests and personal guarantees securing the transferred loan(s), may be applicable depending on the relevant security package (in general, the new secured creditor must be registered with the relevant public registers – eg the Land Book in case of immovable mortgages, or the Electronic Archive for Movable Security in case of movable mortgages – for opposability purposes).

Russia

There are a number of issues to consider before transferring a loan or portfolio of loans. These issues are often covered as part of a due diligence exercise by legal advisors. Some of the key considerations include the following.

Contractual prohibition or restriction of assignment

The parties may contractually prohibit or restrict an assignment. This does not invalidate the assignment and cannot be a ground for termination of such agreement, but the assignor is not exempt from liability before the debtor for such breach.

Form of assignment

An assignment shall comply with the same form requirements as the main agreement. For more information, see Giving and taking guarantees and security – other issues.

Assignment of security interest

Generally, the assignment of rights under the main obligation means simultaneous automatic assignment of rights under the security. However, for the types of pledges that require registration (for more information, see see Giving and taking guarantees and security – other issues) the new creditor will not be able to enforce such security until the registration is made.