FPCT Structures for Moroccan NPL Transfers

The Fonds de Placements Collectifs en Titrisation (FPCT) is currently the primary legal vehicle available for transferring non-performing loan portfolios in Morocco. Established under Law 33-06 on securitisation, the FPCT was designed primarily for performing receivables but has been adapted for NPL transactions in the absence of a dedicated transfer framework. For banks seeking to reduce impaired balances and for investors seeking exposure to Moroccan distressed debt, understanding the FPCT structure is operationally essential.

This article examines how the FPCT mechanism works, its application to NPL portfolios, and its limitations compared to the direct-transfer regime that Draft Law 02-26 proposes but which remains unpromulgated.

The legal foundation: Law 33-06

Law 33-06 relative à la titrisation de créances (Law on Securitisation of Receivables) provides the statutory framework for securitisation in Morocco. The law permits credit institutions, public establishments, and certain other eligible entities to transfer receivables to a special-purpose vehicle — the FPCT — which finances the acquisition by issuing securities to investors.

The law establishes the legal framework for:

• Creation and governance of the FPCT
• Transfer of receivables from originator to FPCT
• Issuance of securities backed by the receivables
• Rights of investors and priority among tranches
• Supervision by the capital markets authority

Law 33-06 was not designed specifically for non-performing loans. It contemplates securitisation of performing credits — mortgages, consumer loans, trade receivables — where the primary function is refinancing and balance-sheet management. Applying it to NPL portfolios requires adaptation.

How the FPCT structure works

An FPCT transaction involves multiple parties with defined roles.

The originator (cédant)

The bank or other eligible entity transferring the receivables. The originator identifies the portfolio, prepares the data, and executes the transfer to the FPCT.

The management company (société de gestion)

An entity authorised by AMMC to manage FPCTs. The management company structures the vehicle, oversees its operations, and reports to investors. Management companies are typically subsidiaries of banks or asset managers with AMMC approval.

The depositary (dépositaire)

A credit institution responsible for custody of the FPCT's assets and verification of the management company's operations. The depositary provides an independent check on the vehicle.

The servicer (recouvreur)

The entity responsible for collecting on the transferred receivables. In many FPCT transactions, the originator retains the servicing role, continuing to manage the loans post-transfer. For NPL portfolios, servicing involves amicable collection, litigation management, and enforcement.

Investors

Purchasers of the notes or units issued by the FPCT. In a tranched structure, senior investors have priority over subordinated investors for cash flows.

Applying the FPCT to NPL portfolios

While Law 33-06 permits the securitisation of receivables including non-performing ones, NPL transactions present specific challenges.

Valuation and pricing

Performing securitisations are priced on predictable cash flows — scheduled principal and interest payments. NPL securitisations must be priced on uncertain recovery cash flows, requiring the same discounted-cash-flow analysis used in direct portfolio sales.

The FPCT structure does not change the fundamental economics. Investors in FPCT notes backed by NPLs are making the same bet on recovery outcomes that a direct acquirer would make. The vehicle is a structuring choice, not an economic transformation.

Security transfer

A critical question for any NPL transfer is whether ancillary security — mortgages, pledges, guarantees — transfers with the receivables. Under Law 33-06, the transfer of receivables to an FPCT carries with it the associated guarantees and security interests by operation of law (Article 16).

However, the practical effectiveness of this provision has been less tested for NPL portfolios than for performing receivables. Questions may arise about:

• Registration of the transfer at land registries for real estate security
• Notice requirements to guarantors
• Opposability to third parties in enforcement proceedings

Banks and investors structuring FPCT transactions for NPLs should obtain legal opinions on these points and ensure the documentation addresses them explicitly.

Borrower notification

Under Moroccan law, transfer of receivables generally requires notification to the debtor to be opposable. Law 33-06 contains specific provisions on notification that simplify this process compared to general civil-law assignment, but the requirements must still be followed.

For large NPL portfolios with thousands of borrowers, the notification process is an operational undertaking that must be planned and executed systematically.

Servicing arrangements

The FPCT does not itself have operational capability; it relies on a servicer to collect on the receivables. For NPL portfolios, servicing involves not routine payment processing but active recovery work: negotiation with borrowers, management of litigation, and enforcement of security.

Where the originator continues as servicer, conflicts of interest must be managed — the originator may have residual exposure (through subordinated notes or other arrangements) that creates different incentives than pure cost-recovery servicing.

Structuring considerations

Several structuring choices affect the economics and risk profile of an FPCT NPL transaction.

Tranching

The FPCT can issue multiple classes of notes with different risk-return profiles. A typical structure might include:

• Senior notes: first claim on cash flows, lowest yield, potentially investment-grade
• Mezzanine notes: intermediate priority and yield
• Junior/equity notes: residual claim after senior and mezzanine are paid, highest yield and risk

Tranching allows the transaction to access different investor bases. Institutional investors with rating constraints may take senior notes; specialised distressed-debt investors may take junior notes.

For NPL portfolios with high uncertainty, the equity tranche absorbs first losses and may represent a substantial portion of the capital structure.

Retention requirements

Originating banks may be required by regulation to retain a portion of the transaction (typically the equity tranche or a vertical slice) to align incentives. Bank Al-Maghrib's prudential framework may impose retention requirements similar to those in European securitisation regulations.

Credit enhancement

Besides subordination, FPCT structures may include other credit enhancement features:

• Excess spread reserves
• Cash collateral accounts
• Guarantees or insurance

These mechanisms provide additional protection to senior investors but add complexity and cost.

Advantages of the FPCT route

Despite its complexity, the FPCT offers certain advantages over informal or contractual arrangements.

Established legal framework

Law 33-06 provides a clear statutory basis for the transfer. The legal treatment of receivables transferred to an FPCT is defined by statute, reducing uncertainty compared to ad-hoc arrangements.

Automatic security transfer

The provision for automatic transfer of ancillary security (Article 16) addresses what would otherwise be a significant legal complexity in transferring secured NPL portfolios.

Regulatory supervision

AMMC oversight provides a degree of investor protection and market credibility. For institutional investors with governance requirements, investing through a regulated vehicle may be preferable to direct bilateral purchases.

Accounting treatment

For originating banks, a properly structured FPCT transaction can achieve derecognition of the transferred assets under IFRS, freeing regulatory capital. The accounting treatment depends on the specific structuring and must be validated with auditors.

Access to capital markets

The FPCT can issue notes that are traded on the Casablanca Stock Exchange, potentially broadening the investor base beyond bilateral purchasers.

Limitations of the FPCT for NPLs

The FPCT was not designed for NPLs, and its limitations are apparent in practice.

Complexity and cost

Establishing an FPCT requires significant legal and structuring work. Management company fees, depositary fees, legal costs, and AMMC filing requirements add to transaction expenses. For smaller portfolios, these fixed costs may make the structure uneconomic.

Time to market

The process of structuring an FPCT, obtaining AMMC approval, and placing notes takes longer than a direct bilateral sale. For sellers seeking rapid execution, this is a disadvantage.

Investor appetite

The Moroccan institutional investor base for FPCT notes backed by NPLs is limited. Domestic insurers, pension funds, and asset managers have historically favoured higher-quality fixed-income products. International investors may be unfamiliar with the structure or require extensive documentation review.

Servicing constraints

The FPCT model assumes the servicer will perform according to the servicing agreement. If servicing quality deteriorates, investors' recourse is limited. The management company supervises but does not directly control day-to-day collection activity.

Comparison with Draft Law 02-26

Draft Law 02-26 proposes a specific framework for direct transfer of non-performing loans, without requiring the FPCT securitisation structure. The draft has been transmitted to the General Secretariat of Government (SGG) for the adoption process but has not been promulgated.

If enacted, Draft Law 02-26 would permit licensed entities to acquire NPL portfolios directly from banks, with security and guarantees transferring by operation of law. This would offer:

• Simpler transaction structure
• Lower fixed costs
• Faster execution
• Direct ownership of receivables rather than note ownership

The comparison is not FPCT versus direct transfer as alternatives today; it is FPCT as the current option versus a potential future alternative. See Morocco's Draft Law 02-26 and the Secondary NPL Market for analysis of what the draft proposes.

Practical implications for market participants

For banks

Banks seeking to dispose of NPL portfolios should evaluate whether the FPCT structure suits their objectives. Considerations include:

• Portfolio size and whether it justifies FPCT fixed costs
• Desired speed of execution
• Accounting and capital treatment requirements
• Availability of management companies with NPL experience

For large portfolios where accounting derecognition is a priority, the FPCT may be attractive despite its complexity. For smaller portfolios or rapid disposals, bilateral sales (where legally feasible) or waiting for Draft Law 02-26 may be preferable.

For investors

Investors considering FPCT notes backed by Moroccan NPLs should conduct the same diligence they would for a direct portfolio acquisition: tape analysis, security verification, recovery modelling. The FPCT wrapper does not change the underlying credit risk.

Additional diligence on the FPCT structure includes:

• Review of the FPCT regulations and offering documents
• Assessment of the management company's capabilities
• Understanding the cash-flow waterfall and any enhancement features
• Evaluation of the servicer and servicing agreement terms

For servicers

The limited pool of servicers capable of managing NPL portfolios for FPCTs represents both a constraint on the market and an opportunity for capable operators. As FPCT NPL transactions increase, demand for independent servicing should grow.

Serenor Capital's role

Serenor Capital advises banks and investors on the analytics underlying FPCT NPL transactions. Our work includes portfolio valuation, cash-flow modelling, recovery scenario analysis, and pricing support.

We do not act as FPCT management company, servicer, or legal counsel. Our function is to ensure that the economic analysis supporting an FPCT transaction — whether from the originator's or investor's perspective — is rigorous and reflects realistic assumptions about Moroccan recovery dynamics.

For related analysis, see How to Value a Non-Performing Loan Portfolio in Morocco and the French-language companion article Loi 33-06 et FPCT pour Créances en Souffrance.

Sources

• Law 33-06 relative à la titrisation de créances (as amended)
• Autorité Marocaine du Marché des Capitaux (AMMC), regulations on FPCT establishment and operation
• Bank Al-Maghrib, Rapport Annuel sur la Supervision Bancaire — Exercice 2025 (June 2026)
• Draft Law 02-26 on the transfer of non-performing loans (transmitted to SGG; not promulgated)