February 12, 2019

European Parliament (EP) published a report that discusses the EC package on the proposal for a directive aimed at fostering NPL secondary markets and easing collateral recovery from secured loans. In March 2018, EC had adopted a comprehensive package of measures, including a proposal for a directive aimed at fostering NPL secondary markets and easing collateral recovery from secured loans.

Post-crisis, many EU banks have accumulated high volumes of non-performing loans (NPLs) in their balance sheets. Although almost halved in comparison to the December 2014 level, the ratio between NPLs and the total loans extended by EU banks (NPL ratio) remains historically high when measured against the ratios of other advanced economies. High levels of NPLs require banks to hold higher amounts of regulatory capital and pay a risk premium on liquidity markets, as a result of which their profitability and growth prospects diminish. To tackle this issue, a number of different initiatives have been adopted both at the national and EU levels. This report examines the state-of-play of the implemented and ongoing issues in the area of NPLs.

 

Related Link: Report

Keywords: Europe, EU, Banking, NPLS, Credit Risk, Regulatory Capital, Secondary Market for NPLS, European Parliament

 

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