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November 20, 2018

ECB published its opinion (CON/2018/54) on a proposal for the directive on credit servicers, credit purchasers, and recovery of collateral. Since ECB considers that the proposed directive falls within its scope of competence, it has decided to exercise its right to submit its opinion.

ECB has been a strong proponent of the development of secondary markets for bank assets, particularly non-performing loans (NPLs), as reflected in the European Council’s action plan to tackle NPLs in Europe. In context of the large stocks of NPLs that remain on the balance sheet of some European credit institutions and as part of a comprehensive solution to NPL resolution, the development of secondary markets may contribute to reducing NPLs. Well-functioning secondary markets may also prevent stock of NPLs from building up in the future.

The proposed directive establishes a number of reporting requirements for credit servicers, credit purchasers, and credit institutions. EU legislators should carefully consider whether these reporting requirements will impede the efficient functioning of the secondary market for NPLs, since a significant reporting burden could deter new entrants to the market or result in duplication of data for competent authorities. The proposed directive gives EBA a mandate to develop draft implementing technical standards that specify the formats to be used by creditors that are credit institutions for the provision of detailed information on their credit exposures in the banking book to credit purchasers for screening, financial due diligence, and valuation of the credit agreement. ECB notes that AnaCredit Regulation (2016/8679) provides for a new dataset, with detailed information on individual bank loans in the euro area. Considering these new regulatory developments, it is important that data templates developed by EBA should take into account the collection of granular credit and credit risk data or any other relevant initiatives to ensure that there is no duplication of efforts and to minimize reporting requirements for credit institutions.

 

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Keywords: Europe, EU, Banking, NPLs, AnaCredit, Reporting Requirements, CON/2018/54, Opinion, EC, EBA, ECB

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