Morocco's Draft Law 02-26 and the Development of a Secondary NPL Market

Morocco's secondary market for non-performing loans has been constrained by the absence of a legal framework enabling direct loan transfers from banks to non-bank investors. That may change. Bank Al-Maghrib has prepared a draft law — referred to as Draft Law 02-26 — that would permit licensed entities to acquire NPL portfolios directly, with ancillary security transferring automatically. The draft has been transmitted to the General Secretariat of Government to begin the formal adoption process. For international distressed-credit investors, this is the most significant potential development in the Moroccan market in years. This article explains the current legal barriers, what the draft proposes to change, and what questions remain open.

Current barriers to NPL transfer

Under existing Moroccan law, there is no specific mechanism for a bank to sell a loan directly to a non-bank investor in the manner common in European NPL markets. The barriers are both legal and operational.

No direct assignment framework

Moroccan civil law permits the assignment of receivables under general principles, but these provisions were not designed for the bulk transfer of banking claims with associated security, guarantees, and procedural positions. The legal uncertainty around whether a non-bank assignee can enforce security in its own name, and whether ancillary rights transfer automatically or require separate formalities, has deterred portfolio transactions.

Security transfer complications

A loan is rarely just a claim. It typically carries mortgage security over real estate, pledges over movable property, and personal or corporate guarantees. Each of these has its own transfer requirements under Moroccan law.

Mortgage security, for example, must be registered against the land title. A transfer of the underlying loan does not automatically transfer the mortgage; a new registration is required, which involves notarial formalities and registration fees. For a portfolio of several thousand secured exposures, the cost and complexity of individual security transfers would be prohibitive.

Guarantees present similar issues. A guarantee may, by its terms, be limited to the original creditor. The question of whether a guarantee survives assignment — and whether the assignee can enforce it without the guarantor's consent — depends on the wording of the instrument and is not uniformly settled.

Notification and confidentiality

Assignment of receivables under the Moroccan Code of Obligations requires notification to the debtor to be opposable to third parties. For performing loans, this is manageable. For non-performing loans, notification can trigger debtor objections, disputes over the assigned amount, and in some cases acceleration of litigation that might otherwise have been managed.

The absence of a framework that addresses borrower notification in a way suited to portfolio transactions — rather than individual assignments — adds operational complexity.

Licensing uncertainty

European NPL markets typically have a licensing regime that distinguishes between portfolio acquirers (who hold title to the claims) and loan servicers (who manage collections and enforcement). Morocco has neither.

A foreign investor wishing to acquire Moroccan NPLs faces uncertainty about what approvals, if any, are required. The absence of a clear licensing path is a barrier to entry for regulated institutional investors who require legal certainty about the permissibility of their activities.

The FPCT workaround

In the absence of direct transfer legislation, Moroccan NPL disposals have used securitisation structures under Law 33-06.

The FPCT structure has been used for NPL transactions, but it is not well suited to the purpose. The law was designed primarily for securitisation of performing receivables — mortgages, auto loans, trade receivables — where the objective is to access capital markets and manage balance-sheet treatment. Adapting it to NPL sales adds cost and complexity:

• A dedicated vehicle must be established for each transaction
• The legal and structuring costs are substantial relative to portfolio value
• The security transfer mechanism, while provided for in the law, has faced practical complications
• Servicing arrangements must be structured within the FPCT framework

For large portfolios where the economics support the structuring cost, FPCT transactions are workable. For smaller sales or regular-way disposals, the overhead is prohibitive. The result is that only large, planned portfolio disposals have been feasible, and opportunistic or smaller transactions have not developed.

What Draft Law 02-26 proposes

Based on disclosures in Bank Al-Maghrib's 2025 supervision report and related regulatory communications, Draft Law 02-26 would establish a dedicated framework for the direct transfer of non-performing loans. The key elements, as disclosed, are:

Direct transferability

Banks would be permitted to transfer NPL portfolios directly to authorised acquiring entities, without the need for a securitisation vehicle. The transfer would be effective upon execution of the sale agreement and any required notifications.

Automatic security transfer

Ancillary security — mortgages, pledges, guarantees — would transfer automatically with the principal claim, without requiring separate formalities for each instrument. This is the provision most important to investors, because it eliminates the cost and uncertainty of individual security transfers.

The draft reportedly provides that the acquirer steps into the creditor's position for purposes of enforcement, including the ability to continue proceedings already underway.

Borrower notification

The draft includes provisions for borrower notification, though the precise mechanism and timing have not been fully disclosed. The question of whether notification is a condition of transfer or merely a formality that can be completed post-closing is significant for transaction structuring.

Licensed acquirers

Only entities licensed under the new framework would be permitted to acquire NPL portfolios. The draft reportedly establishes a licensing regime administered by Bank Al-Maghrib, with capital requirements and operational standards.

The terms on which foreign investors can participate — directly, through a Moroccan subsidiary, or through partnership with a licensed local entity — have not been fully clarified.

Servicing requirements

The draft reportedly requires that NPL portfolios be serviced by licensed servicers, either the acquirer itself (if licensed) or a third-party servicer. This would create, for the first time, a regulated loan-servicing category in Morocco.

What remains uncertain

Draft Law 02-26 addresses the main structural barriers, but significant questions remain open until the law is enacted and implementing regulations are issued.

Scope

Which loans are covered? The framework appears to target NPLs held by credit institutions, but the precise definition — by classification category, by loan type, by borrower segment — has not been disclosed. Consumer-protection considerations may affect the treatment of retail exposures differently from corporate loans.

Eligibility of acquirers

What are the licensing requirements for acquiring entities? What capital must they hold? Can foreign institutional investors acquire licenses directly, or must they operate through locally licensed vehicles? Can a licensed acquirer sell portfolios onward to unlicensed entities, or does the licensing requirement apply to all holders?

Servicing regime

What standards will apply to loan servicers? Will existing banks be automatically eligible, or will they require separate servicing licenses? What conduct requirements will govern servicer interactions with borrowers?

Pricing and transfer mechanics

Will there be regulatory constraints on transfer pricing? Some jurisdictions impose requirements around minimum prices or approval of transaction terms to prevent abuse. The draft's position on these issues has not been disclosed.

Tax treatment

The tax consequences of direct NPL transfers — VAT on servicing, treatment of discount to face value, withholding on cross-border payments — are not addressed by the draft law itself and will require clarification through tax rulings or regulations.

Transitional provisions

What happens to existing FPCT structures? Can portfolios already transferred through securitisation be resold under the new framework? How will the transition be managed?

Implications for international investors

If enacted in substantially the form described, Draft Law 02-26 would remove the principal legal barrier to secondary-market NPL investment in Morocco. The implications are significant.

Market development

A functioning direct-transfer mechanism would enable the kind of regular-way portfolio sales that have developed in Southern European markets. Banks could dispose of NPL portfolios through competitive sales processes without the overhead of securitisation structures. Transaction costs would fall, and smaller portfolios would become economically viable.

Pricing

Increased transaction activity would generate pricing data. Currently, there is limited information on cleared prices for Moroccan NPL portfolios because so few transactions have occurred. A more active market would establish pricing benchmarks.

Servicing industry

The licensing requirement for servicers would create regulatory clarity and potentially attract specialised servicers to establish Moroccan operations. The servicing constraint — the limited availability of experienced third-party servicers — has been a barrier to investment. A regulatory framework that encourages servicing capacity would benefit the market.

Competition

If the framework is accessible to foreign investors — directly or through manageable licensing requirements — Morocco would attract competition from the institutional investors active in European NPL markets. This could compress pricing but would also bring capital and expertise to the market.

What investors should do now

Draft Law 02-26 is not yet law. Investors should not structure transactions on the assumption that direct transfers are currently permissible. The prudent approach is:

Monitor the legislative process. The draft is in the government's adoption circuit. Enactment requires parliamentary approval and promulgation. Implementing regulations will follow. The timeline is uncertain.

Understand the current framework. Until the new law is enacted, the FPCT route remains the only established mechanism. Investors interested in near-term opportunities should familiarise themselves with securitisation structures and their requirements.

Build relationships. Moroccan NPL transactions have historically been relationship-driven. Establishing relationships with selling banks, local advisers, and potential servicing partners takes time and should not wait for legislative certainty.

Prepare analytical capability. The ability to underwrite Moroccan NPL portfolios — to model recovery scenarios, value collateral, assess legal positions — will be valuable whenever the market opens. Building that capability now positions investors to move quickly when opportunities emerge.

For an overview of the Moroccan NPL market and investment considerations, see Morocco's Emerging NPL Market: A Guide for Investors. For the underwriting approach, see Investing in Moroccan NPLs: What Investors Need to Underwrite.

Sources and references

• Bank Al-Maghrib, Rapport Annuel sur la Supervision Bancaire — Exercice 2025 (June 2026): https://www.bkam.ma/content/download/847887/9165409/Rapport%20DSB%202025.pdf
• Bank Al-Maghrib, press release on the 22nd edition of the Annual Banking Supervision Report (June 2026): https://www.bkam.ma/Communiques/Communique/2026/Presentation-de-la-22eme-edition-du-rapport-annuel-sur-la-supervision-bancaire-exercice-2025
• Law 33-06 on securitisation (Titrisation), as amended
• Draft Law 02-26 on the transfer of non-performing loans (not yet enacted; transmitted to General Secretariat of Government for adoption process)