Following the recent elections in Europe, no political party has obtained a majority. The lack of shared programs has led to difficulties forming new stable coalitions. This complex political situation has made governance diffcult and created uncertainty about Europe’s political direction. Many citizens feel disoriented and have lost confidence in the traditional parties. Tens of millions of citizens now turn to nationalist parties that promise them a better future. Europe is also facing the impoverishment of its citizens,with more than 94 million people living in poverty, or 21% of its population.
Climate Change
Alongside these internal political challenges, there is also climate change, whose effects are increasingly visible, with consequences for the environment, public health and the economy. Europe has taken steps to address this. However, difficulties still need to be solved, especially regarding the coordination of efforts on their financing.
Subprime: “A potential threat to Luxembourg?”
The European Commission, through its Directive 2021/2167, attempts to create a new market for banks and credit institutions by allowing them to transfer non-performing loans to third-party agents who will be responsible for reselling the bad debt in a secondary market. All European countries must implement this directive at the national level. Most European citizens are unaware of this directive and do not know, or worse, they cannot understand all its consequences. This directive also touches upon the fundamental right of property. In our opinion, the current transposition of the directive mainly serves the financial lobby and will further impoverish European citizens.
Lobbyists, regulators, and legislators must never forget that a simple increase in fuel prices triggered the Yellow Vest crisis with nearly 100 million people in Europe living in poverty and climate change intensifying, political parties must seek solutions and consensus to meet these challenges and ensure a stable, prosperous, and sustainable future for Europe and all its citizens.
New opportunity for the financial center of Luxembourg
Luxembourg has recently transposed Directive 2021/2167 at the national level. The Chamber of Commerce and the regulator welcome this as an opportunity to enhance the financial attractiveness of Luxembourg by attracting new credit managers for non-performing loans and creating a new European secondary market, and why not worldwide.
The transposition of this directive in different states poses a problem as each country transposes it differently. Citizens do not have the same rights of treatment, and their treatment depends on the jurisdictions of credit managers’ institutions.
The definitions of NLP(non-performing loans) and their treatment are often too subjective and left entirely to the discretion of credit institutions.
This directive does not consider the materializations of the extreme events that hit the economy.
GIVE US
Letter to Members of Parliaments
Dear honorable members of the European Parliament,
I am writing to express my concerns about the recently passed Bad Loans Act. While I recognize the importance of dealing with bad debt, I am deeply concerned about this new law’s lack of protection provided to credit underwriters. First, it is essential to note that credit underwriters play a crucial role in the economy by stimulating consumption and economic growth. However, the new law does not sufficiently protect their rights and interests. In looking at the legislation, I have identified several issues of concern. First, no explicit provisions regarding the recovery procedures for non-performing claims exist.
In my understanding, it is based on the creation of a new market to be created. Furthermore, the law does not provide effective dispute resolution mechanisms for credit underwriters in case of disputes with creditors. Each Creditor is applying its own recovery rules and penalty fees. This can lead to an unfair situation in which credit underwriters are left without recourse in the face of abusive or unfair practices by creditors. Also, once the loan is defaulted and resale, it is impossible for the creditors to refinance their estate.
For example, a Luxembourgish family with children recently saw their apartment put up for sale. The bank sold the apartment at a 40% discount to an investment company, which immediately brought it on the market with the market value (+40%). This case and the ING bank case, where more than 30,000 clients were removed from their accounts, show that it is still challenging to regulate banks effectively.
Another important aspect is that mortgages are linked to insurance life, and the insurance is lost if the creditors default. The worst is that insurance companies pursue creditors and force them to pay for dummy insurance services.
Therefore, I request that you consider these concerns and take steps to improve the Bad Loans Act. I suggest that clear and robust provisions be put in place to protect the rights of credit underwriters, including fair recovery procedures and accessible dispute resolution mechanisms that limit administrative costs of recovery.
It is essential to ensure that the new non-performing loan (NLP) law is balanced and fair, providing adequate warranty and transparency to credit underwriters while effectively addressing the problem of bad debt. Thank you for your attention, and I hope you will consider these concerns in your deliberations on the NLP Act and its future amendments.
Evangelos Papadopolous
Citizen of the World
All democratic constitutions must protect citizens from the plunder of bad financial practices.
ESG stands for Environmental, Social, and Governance, three critical factors used to evaluate an investment or company’s sustainability and ethical impact. By considering these ESG factors, financial companies aim to assess and manage the potential risks and opportunities associated with environmental and social issues and ensure good governance practices.
Incorporating ESG considerations into investment decisions helps align financial goals with sustainable and responsible practices, contributing to long-term value creation and a more sustainable future.
It is essential to notice that Social Responsibility practices must comply with all Democratic Constitutions, which protect citizens against spoliation from bad financial practices.
The right of vigilance for corporates
The right of vigilance for corporations refers to the responsibility and authority of corporate entities to monitor and oversee their operations, ensuring compliance with ethical, legal, and regulatory standards.
It involves identifying and addressing risks, implementing internal controls, and promoting organizational transparency and accountability.
This right empowers corporations to proactively manage their activities and mitigate any potential harm to stakeholders, Customers, the environment, and society as a whole.
Call to Action
Join us in making a difference by taking one (or more) of these impactful actions that can transform our community for the better.
- Europe and the Parliaments must amend or even withdraw this law.
- To strengthen their resilience, banks must integrate socio-economic, environmental, and war risks into their risk models.
- Banks should no longer be their shareholders’ cash cows. An equitable distribution of profits between shareholders and employees and an increase in their capital are urgent. The recipe is very simple: more Capital in Banks equals more credit for consumers and more profits for the Banks!
- Banks must strengthen their role in developing a sustainable economy by providing massive support for investments that facilitate the transition to the zero-carbon economy.
- Banks must also anticipate the challenges posed by artificial intelligence (AI). This could include identifying potential risks associated with using AI in their operations and implementing appropriate measures to mitigate them.
- Development of ethical systems: In the context of prudential management, it is essential that banks develop ethical systems. This means that they must consider the ethical implications of their decisions and actions, ensuring that they are in line with ethical standards and societal values.
