EC welcomed the agreement reached among EU member states on new rules to develop secondary markets for sales of non-performing loans (NPLs). Additionally, European Council announced that the original proposal for the directive by EC also included a part on recovery of collateral. There was no agreement in the Council on this part of the directive. It is, therefore, not included in the Council position and will require further discussion at working level in the Council.
The Directive introduces a harmonized and less restrictive regime for credit purchasers and servicers and removes undue impediments to cross-border activity, while ensuring that the same level of consumer protection is maintained when a loan is sold by a bank. While this agreement is an important step forward, progress has been regrettably slower on complementary elements of the Directive that would increase the efficiency of enforcement regimes. EC announced that further work and discussion on these elements will be needed and should be prioritized in the next legislative cycle. However, given the urgent need to foster development of a well-functioning secondary market for NPLs, the draft rules approved by member states should still be finalized in the current legislative cycle.
Keywords: Europe, EU, Banking, NPLs, Secondary Market for NPLs, Credit Risk, European Council, European Parliament