Featured Product

    ECB Announces Further Steps in Supervisory Approach to Stock of NPLs

    July 11, 2018

    ECB announced further steps in its supervisory approach for addressing the stock of non-performing loans (NPLs) in the euro area. ECB will address the stock of NPLs by setting bank-specific supervisory expectations for the provisioning of NPLs.

    The approach follows the work that has already been undertaken in this area, namely the banks’ NPL reduction strategies and the addendum for provisioning for new NPLs. It creates a consistent framework to address the stock of NPLs as part of the supervisory dialog through bank-specific supervisory expectations. Under this approach, ECB Banking Supervision will further engage with each bank to define its supervisory expectations. The bank-specific supervisory expectations are based on a benchmarking of comparable banks and guided by individual banks’ current NPL ratio and main financial features. The aim is to ensure continued progress to reduce legacy risks in the euro area and achieve the same coverage of the stock and flow of NPLs over the medium term. The approach is aimed at achieving adequate provisioning of legacy NPLs, thus contributing to the resilience of the euro area banking system.

    The decision follows a number of steps taken by ECB to address the high levels of NPLs in the euro area. In March 2017, ECB Banking Supervision published guidance to banks on NPLs, which provided an effective toolkit for banks when tackling NPLs. As part of the guidance, high NPL banks were required to agree strategies to address NPL stocks. In March 2018, ECB Banking Supervision published an addendum to this guidance that set out supervisory expectations for the provisioning of new NPLs. The work so far has led to significant progress in reducing NPLs, with the NPL ratio of significant institutions decreasing from 8% in 2014 to 4.9% in the fourth quarter of 2017. Nevertheless, the current aggregate level of NPLs remain far too high compared to international standards and further efforts are necessary to ensure that the NPL issue in the euro area is adequately addressed.

     

    Related Link: Press Release

    Keywords: Europe, EU, Banking, NPLs, Banking Supervision, Supervisory Approach, ECB

    Related Articles
    News

    APRA Consults to Standardize Submission Date for Quarterly Reporting

    APRA proposed to standardize quarterly reporting due dates for authorized deposit-taking institutions. The proposed standardized due date is 35 calendar days after the last day of the reference quarter, which will create a 14-calendar-day extension for credit unions and building societies.

    November 08, 2019 WebPage Regulatory News
    News

    EBA Publishes Methodology and Draft Templates for Stress Tests in 2020

    EBA published a package for the 2020 EU-wide stress test exercise for banks.

    November 07, 2019 WebPage Regulatory News
    News

    EC Publishes Results of Fitness Check of Reporting Requirements in EU

    EC published results of the fitness check of supervisory reporting requirements in financial services legislation in EU.

    November 07, 2019 WebPage Regulatory News
    News

    BCBS Assesses NSFR and LE Rules in Argentina and China as Compliant

    BCBS published reports that assess the implementation of net stable funding ratio (NSFR) and large exposures, or LE, framework in Argentina and China.

    November 07, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of Plenary Meeting in Paris

    At the meeting, the Plenary reviewed vulnerabilities in the global financial system, fintech developments (including developments in the crypto-asset markets), ongoing work of FSB, and the work program for 2020.

    November 07, 2019 WebPage Regulatory News
    News

    HKMA Highlights Technology Initiatives at the Hong Kong FinTech Week

    HKMA co-organized, with InvestHK, the Hong Kong FinTech Week 2019, which was a five-day flagship fintech event that attracted thousands of attendees worldwide.

    November 06, 2019 WebPage Regulatory News
    News

    ECB Report on Fallback Provisions in Contracts Referencing EURIBOR

    ECB published a report, by private sector working group on euro risk-free rates, presenting recommendations for fallback provisions in contracts for cash products and derivative transactions referencing EURIBOR.

    November 06, 2019 WebPage Regulatory News
    News

    EC Regulation on Homogeneity of Underlying Exposures in Securitization

    EC published the Delegated Regulation 2019/1851 regarding the regulatory technical standards on the homogeneity of the underlying exposures in securitization.

    November 06, 2019 WebPage Regulatory News
    News

    FSI Examines Regulatory Approaches on Climate Risk Assessment

    The Financial Stability Institute (FSI) of BIS published a paper that examines the regulatory approaches being used for climate risk assessment in the insurance sector, in particular through enterprise risk management (ERM) frameworks.

    November 06, 2019 WebPage Regulatory News
    News

    SRB Launches Q&A Process for Resolution Reporting

    SRB has setup a dedicated solution for raising questions on the resolution reporting.

    November 06, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4112