to the point: finance l Q4/2024

As 2024 draws to a close, we reflect on some of the most anticipated regulatory updates in Q4 and hot trends in corporate finance and the non-performing loans (NPLs) markets.

This edition provides a comprehensive overview of key regulatory and financial developments shaping European markets. Each article offers insights into emerging trends, regulatory updates and strategic priorities relevant to industry stakeholders, giving a taste of what to expect in the upcoming period.

The focus spans various jurisdictions, beginning with Romania's new rules on interest limitation for non-banking financial institutions (IFNs) and debt assignment. In Poland, corporate and project finance trends for 2024 signal pivotal shifts, while market traders of virtual currencies receive guidance on the application of the Transfer of Funds Regulation (EU) 2023/1113 (TFR). Corporate real estate risks amid rising NPL ratios are analysed for Austria, while Hungary addresses customer engagement practices through the National Bank's recommendations for insurance-based investment products (IBIPs).

At the EU level, the European Banking Authority (EBA) outlines its priorities for 2025, while the European Securities and Markets Authority (ESMA) continues efforts to streamline the prospectus format, harmonise liability standards, and ensure better transparency for issuers and investors. More importantly, the Listing Act's publication in the EU Official Journal marks a milestone in fostering more efficient capital markets.

While consumers enjoy enhanced protection across EU and local markets, regulated financial entities should start reviewing their internal policies to ensure compliance with these regulatory updates. These developments reflect the dynamic nature of Europe's financial and regulatory landscapes.

We encourage readers to consider these insights as they navigate the challenges and opportunities in their sectors.

Consumer Finance | Romania

New rules on interest limitation for IFNs and debt assignment. Effective 11 November 2024, Law 243/2024 introduces measures to protect Romanian consumers from excessive loan costs charged by Romanian non-banking financial institutions (IFNs). The law caps the effective annual interest rate (DAE) at eight percentage points above the National Bank of Romania's reference rate for mortgage loans and at 27 percentage points above the same rate for consumer loans.

For consumer loans, the total daily costs payable to an IFN are capped based on the loan amount, ensuring that the total repayment cannot exceed twice the total loan value.

The law also applies to certain ongoing loan agreements, allowing consumers to request a cost review if the new limits are exceeded, with potential judicial intervention if necessary.

Additionally, the law mandates more transparency in debt assignment in requiring assignors to provide consumers with supporting documents on the outstanding debt. It also prohibits debt recovery entities from charging consumers more than the debt amount certified by the creditor, including debt enforcement expenses.

Market Place | Poland

Key trends in Polish corporate and project finance in 2024. In 2024, Poland's corporate and project finance sectors experienced notable regulatory and market shifts. New rules on corporate finance and project sustainability, aligned with EU directives, required in-creased transparency and compliance with ESG standards. Alternative financing options, such as private debt and ESG-linked loans, gained traction as firms sought greater flexibility amid rising interest rates. Key project finance trends centred on renewable energy and urban development, supported by public-private partnerships and green bonds. However, global economic conditions, especially inflation, posed challenges, driving Polish companies toward debt restructuring and cross-border risk management. Looking forward, these developments signal a growing focus on sustainability, digital finance and regulatory alignment for Polish corporations and investors.

Regulatory | Poland

Statement to virtual currencies traders on TFR Regulation application. The Polish General Inspector of Financial Information released a statement clarifying that, as of 30 December 2024, virtual currency businesses must apply the requirements set forth in the TFR. This regulation pertains to the information accompanying transfers of funds and certain crypto-assets. Under the TFR, businesses will need to review their existing procedures to meet the new requirements, such as verifying the actual ownership or control of a non-hosted address when crypto-assets are sent or received from that address. Additionally, the TFR mandates that businesses implement appropriate technical and organisational measures to align with updated anti-money laundering obligations.

Marketplace | Austria

Navigating corporate real estate risks amid rising NPL ratios. The Austrian National Bank's (OeNB) Financial Stability Report 48, published in November 2024, highlights an uptick in non-performing loan (NPL) ratios within the commercial real estate sector, reflecting growing concerns among banking regulators. While Austria has yet to fully implement the EU's NPL Directive, existing legal frameworks provide effective mechanisms for executing secondary market transactions involving corporate mortgages, even in higher-risk scenarios. Addressing considerations such as banking secrecy and mortgage transfer procedures, particularly regarding registration fees, can further enhance transaction efficiency. Staying informed about these developments is crucial for stakeholders navigating the evolving landscape of secondary transactions in (distressed) corporate real estate financings.

Insurance | Hungary

National Bank of Hungary issues recommendations on welcome calls for IBIPs distribution. To maintain the effectiveness of sales and ensure customer protection, the National Bank of Hungary (NBH) issued a recommendation on "welcome-calls" during the distribution of insurance-based investment products (IBIPs) to consumers. The aim is to establish good practices during the customer engagement process and to promote ethical IBIP offerings, fostering a stable, long-term portfolio. To achieve these objectives, the Recommendation provides detailed guidance on topics and information to be included in welcome calls and explicitly defines sample questions. Compliance with the Recommendation may be monitored by the NBH and service providers are required to apply its provisions from 1 January 2025.

Regulatory | EU

Key priorities and initiatives for the EBA in 2025. The EBA has published its Work Program, outlining the strategic priorities for 2025. These priorities are structured around five main pillars, addressing areas ranging from ensuring economic stability and sustainability to improving data infrastructure. At a more applied level, the EBA's strategy focuses, among others, on the following:(a) initiating oversight and supervisory activities for DORA and MiCAR; and (b) developing consumer-oriented mandates and ensuring a smooth transition to the new AML/CFT framework.

With respect to the Digital Operational Resilience Act (DORA), the EBA will continue to build a new IT system, ensuring a proper oversight function that will contribute to a consistent framework for the digital risk management dimension of the Single Rulebook.

In terms of MiCAR, the EBA will further enhance supervising issuers of significant asset-referenced and e-money tokens, thus contributing to the unification of crypto-asset issuance regulation.

Regarding the development of the consumer-oriented mandates, the EBA will continue to monitor areas where further regulatory response may be needed, such as crypto-assets, tokenisation in relation to new financial products and services as well as decentralised finance (DeFi) and AI/ML use cases in the financial sector.

As a novelty, the EBA will start to deliver payment services and depositor protection mandates conferred under the revised Deposit Guarantee Schemes Directive and will particularly focus on prevention of payment fraud.

Capital Markets | EU

Prospectus disclosure and liability harmonisation under scrutiny. The ESMA is consulting on prospectus disclosure and liability harmonisation to ease the regulatory burden and boost cross-border capital markets (see here and here).

Key proposals include streamlined prospectus content, page limits and standardised formats. For non-equity securities with environmental, social and governance (ESG) claims, the ESMA suggests proportionate disclosure, to ensure a balance between preventing greenwashing and content burden.

In addition, the ESMA is exploring the harmonisation of civil liability rules for prospectuses as an enabler for increased cross-border offerings. Other considerations include introducing "safe harbour" provisions similar to those applied in the US and the UK, which limits liability for forward-looking statements under certain conditions to encourage issuers to provide more forward-looking information to investors.

Stakeholders are urged to provide input and monitor developments to align with evolving requirements and seize emerging opportunities. Feedback is sought by 31 December 2024, with a final report due in Q2 2025.

Capital Markets | EU 

EU Listing Act – Changes to the prospectus and market abuse regime.

The EU Listing Act, which seeks to increase the number of company listings in the EU and simplify compliance with capital markets regulations under the Market Abuse Regulation (MAR), was published in the Official Journal of the European Union on 14 November 2024. The legislative package includes amendments to the Prospectus Regulation, such as increased thresholds and new exemptions to the obligation to publish a prospectus, reduced disclosure or the new EU Growth Prospectus regime for SMEs, as well as a streamlined EU Follow-on Prospectus for secondary issuances. Significant changes to the MAR encompass intermediate steps in protracted processes no longer triggering inside information disclosure requirements, replacing the criterion pursuant to which delayed disclosure of inside information must not mislead the public, increased thresholds for directors' dealings reporting or amendments to the market sounding framework. While some changes are applicable as of 5 December 2024, the rest of the provisions will apply at later stages, i.e. from 5 March 2026 or 5 June 2026.

For further information, see our Legal Insight, available here.