Legal entities supervised by the Bank of Greece-definitions and basic legal requirements
The institutions, which are licensed and supervised by the Bank of Greece are both credit/financial institutions and insurance companies:
FINANCIAL INSTITUTIONS
Credit companies
Article 153 par. 4, 5 &6 of Law 4261/2014 provides that:
“4. Credit companies may be established and operate only in the form of an S.A. company or a European Company (SE) under Regulation (EC) No 2157/2001 with its actual and registered office in Greece. The main purpose of credit companies is to provide credit to natural persons for the purpose of meeting their consumer and personal needs, based on the rules applicable to credit granted by credit institutions. The Bank of Greece may lay down the terms and conditions under which such companies may carry on complementary or complementary activities alongside their principal activity of granting credit.
5.The establishment and operation of credit companies in Greece requires a special license from the Bank of Greece, which is published in the relevant issue of the Government Gazette. The same applies to the conversion of an existing S.A. company into a credit company. In order to grant the above authorization, the Bank of Greece shall request and evaluate the corresponding data and information provided by this Law for the granting of an operating license to a credit institution. The Bank of Greece may further specify the conditions for the granting of the above authorization and determine the minimum share capital required for the establishment and operation of credit institutions, as well as the amount of such capital. That minimum share capital must be fully paid up in cash.
6.The shares of credit companies are nominative (i.e. shareholders are named). The Bank of Greece shall exercise supervision and control over the undertakings referred to in this Article and shall regulate by its acts the relevant corporate governance and internal control systems. It shall also assess the partners, members of the Board of Directors and the heads of the functions of such companies in analogy with those applicable to credit institutions and may further request any relevant data and information. The provisions of this Law applicable to credit institutions shall apply mutatis mutandis to the concept and content of supervision, including the possibility for the Bank of Greece to lay down general or undertaking-specific rules.”.
7.The Bank of Greece may revoke the operating license granted to a credit company, in accordance with the provisions of Article 19.
Financial Leasing Companies
Article 1 Law 1665/1986 provides that leasing contracts may only be concluded as lessors:
“(a) joint-stock leasing companies, which are established for the purpose of carrying out the operations referred to in Article 1 of this Law,
(b) credit institutions within the meaning of point a’ of item 1 of Article 2(1) of Act No. 2 of the Law on the Leasing of Financial Services. 2076/1992 (Government Gazette 130 A’), as in force, which are established and operating in Greece,
(c) credit institutions, as defined above, which have their head office in a Member State of the European Economic Area (EEA) and are established in Greece through a branch or provide cross-border services in Greece within the meaning of Articles 11 and 13 of Law No. 2076/1992, as well as credit institutions, in the aforementioned sense, which are established in a third country and are established in Greece through a branch,
(d) financial institutions within the meaning of item 6 of Article 2 of Law No. 2076/1992, which are established in a Member State of the EEA and which are established in Greece through a branch or provide cross-border services in Greece, in accordance with Article 14 of Law 2076/1992.
(e) financial institutions, which are domiciled abroad and established in Greece through a branch and which do not fall under case (d) of this subparagraph.
Β. A special operating license is required from the Bank of Greece, which is published in the relevant issue of the Government Gazette:
(a) for the establishment and operation in Greece of joint stock leasing companies,
(b) for the establishment and operation of new public limited liability companies for the purpose of establishing and operating in Greece, (c) for the establishment and operation in Greece of branches of foreign financial institutions, as referred to in subparagraph (e) of subsection A of this paragraph, in order to engage in the activity of leasing in Greece.
C.In order to grant the above license, the Bank of Greece requests and evaluates the relevant data and information provided for by Law no. 2076/1992 for the granting of an operating license to a credit institution.
The Bank of Greece may, by an act of its Governor, further specify the conditions for the granting of the above license and determine, on a case-by-case basis, the type of activities that the branches of foreign financial institutions referred to in subparagraph (c) of subsection B of this paragraph may carry out in Greece in parallel with the activity of financial leasing, taking into account the supervisory regime in force in their country of domicile. The Bank of Greece may also, by an act of its Governor or a body authorized by the Governor, determine the terms and conditions under which the companies referred to in subparagraph (a) of subparagraph A of this paragraph may carry on complementary or similar activities in parallel with the activity of leasing.”
“2. (a) The paid-up share capital required for the establishment and operation of joint stock leasing companies or the amount of equity capital, in the case of a joint stock company that is converted into a leasing company, may not be less than half of the minimum share capital required for the establishment of credit institutions in the form of a joint stock company within the meaning of point (a) of point 1 of Article 2 of Law No. 2.2076/1992.
(b) Subject to the provisions of Law no. 2076/1992, a corresponding obligation to pay capital is required for the granting of a license for the establishment and operation in Greece of branches of foreign financial institutions, the amount of which is determined by the Bank of Greece, in proportion to the amount applicable to branches of credit institutions established in Greece, within the meaning of the above, with headquarters in countries outside the European Economic Area.
(c) An act of the Governor of the Bank of Greece or a body authorized by him may regulate all the details necessary for the application of this paragraph.”
Factoring Companies
Article 1, Law 1905-1990 provides that:
“1. A commercial debt collection agency contract (factoring agreement) is drawn up in writing between a supplier of goods or services in his main occupation and a commercial debt collection agent who undertakes to provide the supplier, for the period agreed, for a fee, with services relating to the monitoring and collection of one or part or all of the supplier’s claims, in particular under contracts for the sale of goods, the provision of services to third parties or the execution of works. The agency services include in particular the assignment of receivables to the agent with or without recourse, the authorization of their collection, the financing of the supplier by means of discounting of the receivables, the accounting or legal monitoring of the receivables, their management, the total or partial coverage of the supplier’s credit risk.
- The agency agreement may also relate to claims not arising at the time of conclusion of the agreement, as well as to the determination, in the form of a special open account, of the amount of the credit risk which the agent undertakes to cover at any one time.”
Article 4 of L.1905/1990 provides that:
“1. The activity of agency of third-party business claims, as described in Article 1 of this Law, may be carried out only by: (a) banks, legally established and operating in Greece; and (b) S.A. companies with the sole purpose of carrying out this activity.
- The establishment of S.A. companies referred to in sub-paragraph b’ of the previous paragraph of this article requires a special license from the Bank of Greece, which is published in the Government Gazette. A similar permit is required for the conversion of an existing company into an S.A. company with the exclusive purpose of brokering the business claims of third parties, as well as for the establishment and operation in Greece of branches of foreign Companies with the same purpose. Acts of the Governor of the Bank of Greece shall lay down the criteria and conditions for the granting of authorization under this provision.
- The paid-up share capital of the joint stock companies referred to in subsection b’ of paragraph 1 of this Article may not be less than one quarter (1/4) of the minimum share capital required for the establishment of a bank. The payment of the above capital is also required for the granting of a license for the establishment and operation in Greece of foreign companies for the agency of third-party commercial claims.
For the above legal entities, the specific prerequisites for their licensing are specified by the Executive Committee Act E 193/1/27.09.2021 (Government Gazette B’ 4642) “Terms and conditions for the licensing of the establishment and operation of companies: a) leasing, b) credit and c) business claims agency – Special holdings – Repeal of Governor’s Act 2622/21.12.2009 “ and other Acts of the Governor of the Bank of Greece”.
Under the provisions of the above Committee Act “The minimum initial capital shall be paid in cash and shall amount to:
i)For joint stock leasing companies, in accordance with point (a) of par. (a) in accordance with item (a) of Article 2 of Law 1665/1986, in an amount equal to half of the current minimum initial capital required for the establishment of credit institutions in the form of a public limited company, within the meaning of item (1) of paragraph (1) of Article 2 of Law 1665/1986. 1 of article 3 of Law 4261/2014, i.e., currently, nine million euros (€9,000,000),
ii)For joint stock companies providing credit, in the amount of nine million euros (€9,000,000) and
iii)For factoring companies, in accordance with par. 3, of Article 4 of Law 1905/1990, in an amount equal to one quarter (1/4) of the applicable minimum initial capital required for the establishment of credit institutions in the form of a public limited company, within the meaning of item (1) of paragraph (1) of Article 3 of Law 4261/2014, i.e., currently, four million five hundred thousand euros (€4,500,000). Exceptionally, up to half of this capital may be covered by a contribution in kind, i.e., currently, the amount of two million two hundred and fifty thousand euros (€2,250,000), as defined in par. 4 of Article 4 of Law No.1905/1990.
Microfinance Institutions
They are regulated by Law 4701/2020. According to article 2 (Definitions) “microfinance’ or ‘microcredit’ means (microfinance): credit for a maximum amount of money €25.000, which is granted exclusively in accordance with the provisions of this law.
Under article 14
Microfinance institutions may provide microfinance, by way of example, as follows:
(a) all forms of credit up to twenty-five thousand euros (€25.000), either to cover investment projects for investment needs or as working capital,
(b) leasing products up to twenty-five thousand euros (€25.000) for the acquisition of equipment,
(c) independent guarantees up to twenty-five thousand euros (€25.000), which may not be used to obtain loans from other financial institutions.
(d) forms of credit intended to strengthen the public policies or the social and economic development of the integration of vulnerable social groups, up to a maximum of twenty-five (EUR 25000), and in particular for, tackling unemployment or the suspension or reduction of unemployment suspension or reduction of working time for reasons not attributable to their own volition.
Article 15 par. 1 provides that Beneficiaries of points (a), (b) and (c) of par. 1 of Article 14 (meaning the abovesaid independent guarantees) are small businesses, natural persons, natural persons setting up micro-entities; and natural persons carrying out a sole proprietorship activity and social and solidarity-based bodies Economy, in accordance with the provisions of Law No. 4430/2016 (Α΄ 205).
The rules for the supervision of these companies by the Bank of Greece are also set out in the PEE 193/2/27.09.2021 (Government Gazette B’ 4642) “Rules for the prudential supervision of leasing companies, credit providers, credit agencies and microfinance institutions under Law No. 4701/2020”.
Credit Servicing Firms
A new law is in force for the regulation of credit servicers (ΕΔΑΔΠ), Law 5072/2023 which implemented Directive 2021/2167 EP.
According to article 3, it applies to (a) credit administrators acting on behalf of a buyer of credit or a credit institution or financial institution established in the European Union (EU) or legally established in the EU, in relation to the creditor’s rights arising from credit granted by a credit institution or financial institution established in the EU or legally established in the EU, in accordance with the applicable law,
(b) credit purchasers of the creditor’s rights under a credit agreement, whether or not serviced, granted by a credit institution or financial institution established in the EU or legally established in the EU, in accordance with the applicable law.
Article 5 provides that:
- Credit management activities on behalf of a buyer of credit shall be carried out exclusively by licensed credit managers. The competent authority for the licensing of credit managers shall be the Bank of Greece.
- Credit managers are financial institutions within the meaning of paragraph 26. 1 of Article 4 of Regulation 575/2013/EU.
- A credit manager’s license shall be granted in accordance with the procedure set out in Article 8 exclusively to Loan and Credit Management Companies (LACs), which are public limited companies with the exclusive purpose of credit management, provided that they meet the requirements of Article 6.
- With the permission of the Bank of Greece, the N.D.A.D.D.P. may, in addition to the purpose of par. 3, may grant new credit to borrowers whose credit is managed either by themselves or by other credit managers.
Article 6 sets out a number of requirements for the authorization of a credit manager company, some of which are: the minimum paid-up share capital, registered office in Greece, requirements of ethical status and knowledge regarding the members of BoD, policies the company must have and principles which they must follow, while in article 10 the minimum share capital is provided as follows: 1. When applying for a credit manager’s license, the Loan and Credit Claims Management Companies (LCRCs) referred to in par. 3 of Article 5 must have paid in full in cash an initial capital of at least one hundred thousand (100,000) euros, which is deposited in a credit institution domiciled in Greece or operating in Greece with a branch and which is not an affiliated entity of the applicant within the meaning of the affiliated party of Annex A of Law No. 4308/2014 (Α’ 251).
2.When submitting an application for the granting of a credit manager’s license, the CRAs of par. 4 of Article 5 must have paid in full in cash an initial capital of at least four million five hundred thousand (4,500,000) euros, which is deposited in a credit institution domiciled in Greece or operating in Greece with a branch and is not a related entity to the applicant entity within the meaning of the related party of Annex A of Law No. 4304/2004 of the Republic of Greece. 4308/2014.
The specific Terms and conditions for the licensing of Loan and Credit Claims Management Companies under Law No. 5072/2023 are provided in the Meeting 225/30.01.2024 of the Bank of Greece.
Payment Institutions- Payment Initiation Service Providers – PISPs
Payment Institutions and are regulated by Law 4537/2018, according to which and in particular article 11 par. 1: Undertakings, other than those referred to in cases (a) (credit institutions), (b) (electronic money institutions) (c) (postal cheque offices), (e) (the European Central Bank) and (f) (the Greek State and other Member States) of Article 1(2), and other than natural or legal persons benefiting from the exemption provided for in Article 34, which intend to provide payment services, shall be required to obtain authorization as payment institutions before they start providing payment services. The authorization shall be granted only to legal persons referred to in paragraph 1 of Article 5 established within the territory of Greece. And according to article 11 par. 4 The Bank of Greece shall grant an authorization only if, in view of the need to ensure sound and prudent management, the payment institution has a sound organizational framework for its business activities relating to payment services, which includes a clear organizational structure with clear, transparent and consistent lines of responsibility, effective procedures for identifying, managing, monitoring and reporting the risks it assumes or may assume, as well as adequate internal control mechanisms, including The framework, processes and mechanisms are comprehensive and proportionate to the nature, scale and complexity of the payment services provided by the payment institution.
The definition for Payment Initiation Service Providers is provided in article 2 par 1 (a) credit institutions as defined in point 1 of par. 1 of Article 4(1) of Regulation (EU) No 575/2013 (OJ L 176), including their branches as defined in point 17 of paragraph (17) of Article 4 of Regulation (EU) No 575/2013 (OJ L 176) 1 of Article 4 of that Regulation, where those branches are located in Greece either their head office is located within the European Union or, pursuant to Article 36 of Law No. 4261/2014 (A’ 107), in a third country, as well as the Deposits and Loans Fund, b) electronic money institutions, as defined in item 3 of article 10 of Law No. 4021/2011 (A’ 218), including, in accordance with Article 18 of the said Law, branches of electronic money institutions having their registered office outside the European Union, which operate in Greece and only to the extent that the payment services offered by such branches are related to the issuance of electronic money; c) postal cheque offices which are authorized under national legislation to provide payment services; (d) payment institutions as defined in point 4 of Article 4; (e) the European Central Bank (ECB) and national central banks when not acting in their capacity as monetary or other public authorities; (f) the Greek State and other Member States or their regional or local authorities when not acting in their capacity as public authorities.
According to article 5 par. 1 1. Payment institutions shall be established and operate in the form of a public limited company or a European Company (SE) as defined in Regulation (EC) No 2157/2001 (OJ L 294) following an operating license granted by the Bank of Greece. In order to obtain a license as a payment institution established in Greece, the person concerned shall submit to the Bank of Greece an application accompanied by the following information: program of activities, business plan, description of the organizational governance framework and internal control mechanisms, description of the process in place to control, manage and monitor a security incident, description of the process in place to archive, monitor, identify and restrict access to sensitive payment data, description of business continuity arrangements, description of the principles and definitions applied for the collection of performance statistics, transactions and fraud, a documented description of the security policy, a description of the internal control mechanisms for money laundering, a description of the organizational structure, the identity of the statutory auditors or audit firms
Regarding the initial capital, article 7 provides that:
Payment institutions shall, at the time of authorisation, have initial capital consisting of one or more of the items set out in cases (a) to (e) of par. 1 of Article 26 of Regulation (EU) No 575/2013, as follows: (a) where the payment institution provides only the payment service referred to in point (f) of point 3 of Article 4, its capital shall never be less than twenty thousand (20,000) euros, (b) where the payment institution provides the payment services referred to in point (g) of Article 4(3)(3), its capital is never less than EUR 50 000, (c) where the payment institution provides any of the payment services referred to in points (a) to (e) of point 3 of Article 4, its capital is never less than one hundred and twenty-five thousand (EUR 125 000).
Additionally, safeguard requirements are provided in article 10.
Βureaux de change
According to L. 5422/1932, article 2 par. 3 b, as amended The foreign exchange bureau operate as limited liability companies under a license from the Bank of Greece. In order to carry out other activities in addition to their main activity as described above, the foreign exchange offices must have obtained a special license from the Bank of Greece. The regulatory framework for foreign exchange bureau may provide for the obligation to pay a minimum share capital higher than that provided for public limited companies, its diversification depending on the number of operating outlets and the risks generally assumed, as well as the deposit of part of it with the Bank of Greece in the form of a guarantee for the sanctions of paragraph 4 of this article. The above regulatory framework also covers persons who already carry out market operations in the form of a guarantee for the sanctions of paragraph 4 of this article. The above regulatory framework also covers persons who already carry out market operations in the form of a guarantee for the sanctions of paragraph 4 of this article.
More specifically, Bureaux de change may operate only as sociétés anonymes, subject to prior authorization by the Bank of Greece. The minimum initial capital required is €200,000.00. Throughout their operation, the regulatory own funds must not fall below the above-mentioned minimum amount. The above mentioned minimum amount of capital will cover the establishment of up to six (6) branches and shall be increased by twenty-five thousand euro (€25.000) for each additional branch.
The regulatory framework for the authorization and supervision of the bureaux de change by the Bank of Greece is incorporated in the provisions of Bank of Greece Governor’s Act 2541/27.2.2004 “Codification of, and amendment to, Bank of Greece Governor’s Act 2440/11.1.1999, “Establishment and operation of bureaux de change in Greece by sociétés anonymes other than credit institutions” (Government Gazette A 87), as currently in force.
INSURANCE COMPANIES
In the Greek private insurance market, the following companies are active: Insurance societe anonyme companies based in Greece, life insurance companies, non-life insurance companies with domiciled in Greece and with a registered office in Greece, insurance companies with branches in a third country (outside the EU or the EEA), insurance undertakings established in an EU or EEA Member State under establishment (through a branch) or under the freedom to provide services (FIS), and mutual insurance cooperatives.
Under Greek Law, insurance contract is defined in article 1 of Law no. 2496/1997, as amended with paragraph 7 of article 278 of Law No. 4364/2016 and provides that: “With the insurance contract the insurance company (insurer) undertakes the obligation towards its contracting party (the recipient of the insurance) or the third party, for a premium, a) either to pay a benefit (premium) in money or, if there is a special agreement, in kind, when the event referred to in Article 4 and Article 5(a), (b), (c) and (d) of the Act adapting Directive 2009/138/EC on which it was agreed to make the obligation dependent (insurance event) occurs.
The insurance contract shall include at least: (a) the particulars of the contracting parties and the beneficiary of the insurance, if the latter is a different person; (b) the duration of the insurance contract; (c) the person or object and its monetary value or property threatened or related to the occurrence of the risk, in case a’ of paragraph 1 of this Article, d) the type of risks or work performed, e) the maximum limit of liability of the insurer (sum insured), if any, f) any exclusions of coverage, g) the lump sum or the initial premium, and h) the applicable law, if it is not Greek law.”
Law no. 4364/2016 is the basic law regulating the activity of insurance companies in all their forms. This law implemented Directive 2009/138/EC and Council Directive 2009/138/EC of 25/11/2009 on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II), Articles 2 and 8 of Directive 2014/51/EU of the European Parliament and of the Council of 16/04/2014 amending Directives 2003/71/EC and 2009/138/EC and Regulations (EC) No. 1060/2009 (EU), No 1094/2010 and (EU) No 1095/2010, as regards the powers of the European Insurance and Occupational Pensions Authority (hereinafter referred to as EIOPA) and the European Securities and Markets Authority and Article 4 of Directive 2011/89/EU of the European Parliament and of the Council of 16 November 2011 on the supplementary supervision of financial entities in financial conglomerates and related provisions of private insurance legislation.
It is expressly stated in the said law that it applies to insurance companies, having their head office in Greece, or wishing to acquire a head office in Greece, for all the non-life and life insurance they carry on within the European Union either under the establishment or the freedom to provide services, while an insurance undertaking is expressly defined as a direct life or non-life insurance undertaking which has obtained an operating license in accordance with Articles 7 or 10 and 11 of Law No. 4364/2016 or, if it is an insurance undertaking with its head office in another Member State of the European Union, has been authorized in accordance with Article 14 of Directive 2009/138/EC.
Article 14 sets the rules for Central administration, legal form, licensing conditions. Most basic provisions provide that 1. The Supervisory Authority shall grant an authorization to an insurance or reinsurance undertaking if: (a) the undertaking has its registered office and central administration in Greece. (b) The undertaking has the form of a société anonyme company or, in the case of a non-life insurance undertaking or a reinsurance undertaking, also the form of a mutual insurance cooperative. The undertaking may also take the form of a European company as defined in Regulation No 2157/2001 (L.294/10.11.2011). (c) The insurance company has as its sole object insurance activities and operations directly arising therefrom, to the exclusion of any other commercial activity. The reinsurance company has as its sole object reinsurance activities and related operations, including the acquisition of participations in undertakings operating in the financial sector within the meaning of Article 2(8) of Directive 2002/87/EC (L. 35/11.2.2003) or Article 2(8) of Law No. 3455/2006 (Α’ 84). d) The company shall submit to the Authority its articles of association and program of activities in accordance with Article 16 hereof. e) The company shall provide evidence to the Authority that: (ea) it has eligible basic own funds to cover the Minimum Capital Requirement threshold as provided for in point (d) of Article 102(1) of this Regulation.
In general, Solvency II is the single framework for the operation and supervision of insurance and reinsurance undertakings operating in the EU, in accordance with Directive 2009/138/EC, which was incorporated into Greek law by Law No. 4364/2016 (FEK A 13). A number of directives and EU Regulations have been issued for Solvency II, for packaged products basic information (PRIIP), for the European Individual Pension Product (PEPP).
Further, Law 4583/2018 implemented Directive 2016/97 for the operation and supervision of the distribution of insurance products in the EU.
The financial supervision by Bank of Greece include the verifications, for all the activities of the insurance or reinsurance companies, or of the branches of a third-country insurance or reinsurance companies, of their solvency situation, the establishment of technical provisions, their assets and eligible own funds, in accordance with the rules of Law 4364/2016 and European law. In the case of companies carrying on Class 18 ‘Assistance’ against losses, supervision shall also extend to the control of the technical means available to such insurance undertakings for the proper performance of the assistance business they have undertaken.
* The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.