General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
November 24, 2017

Danièle Nouy, Chair of the ECB Supervisory Board, spoke in Frankfurt about the progress of the European banking supervision over the past three years, along with the path forward. She also stressed on finding a sustainable solution for NPL resolution.

Ms. Nouy highlighted that the European banking supervision has replaced 19 different national supervisory regimes with a single European one and has come much closer to achieving its goals. For instance, since 2014, the correlation between Supervisory Review and Evaluation Process (SREP) scores and supervisory capital requirements has almost tripled—from 26% to 76%. According to Ms. Nouy, “Europe is overbanked” and “the European banking sector needs to consolidate.” In the context of overbanking, she highlighted the positive aspects of the Single Resolution Mechanism (SRM) for banks in Europe, as SRM allows banks to fail in an orderly manner without unleashing a systemic crisis. Mergers and acquisitions are another option to ease the problem of overbanking, according to her. She highlighted that Banking Union has made the cross-border mergers more attractive. “So, it is fair to say that the door has been opened to consolidation.”

She also talked about the issue of high nonperforming loans (NPLs), on which some progress has been made. Earlier this year, ECB Banking Supervision published qualitative guidance to banks on how to deal with NPLs. “With reference to that guidance, we have now scrutinized the plans devised by the banks. And we have started to provide feedback. The situation is very diverse, so we need to assess it on a case-by-case basis and find the appropriate solution for each bank.” A sustainable solution must also ensure that the problem does not reappear. To that end, ECB has published for consultation an addendum to its guidance, setting out expectations from banks in terms of making provisions for future NPLs. The ECB guidance on NPLs provides the basis for a structured dialog with each individual bank. However, the NPL issue needs to be addressed at other levels as well. For instance, “huge differences” exist between euro area countries when it comes to resolving NPLs in court. In some countries, such procedures take considerably longer than in others. National governments must address this by streamlining judicial systems and speeding up court procedures. In a Banking Union, there should be no significant differences in the time it takes to resolve NPLs in court. Out-of-court settlements should also become an instrument in resolving NPLs, added Ms. Nouy. She concludes that it ”requires a joint effort by banks, supervisors, regulators, and politicians to resolve the problem of non-performing loans [NPLs].”

 

Related Link: Speech


Keywords: Europe, EU, Banking, SREP, SRM, NPLs, EBA

Related Articles
News

APRA Proposes Changes to Credit Risk Management Standard for Banks

APRA is proposing to update its prudential standard on credit risk management requirements for authorized deposit-taking institutions.

March 25, 2019 WebPage Regulatory News
News

EIOPA Publishes Q&A on Regulations in March 2019

EIOPA updated questions and answers (Q&A) on the implementing and delegated regulations related to the Solvency II Directive.

March 25, 2019 WebPage Regulatory News
News

BCBS Issues Follow-Up Reports on Basel III Implementation Assessments

BCBS published a report summarizing the follow-up actions taken or planned by member jurisdictions as of the end of 2018; these actions are intended to address deviations from the Basel standards identified as part of the Regulatory Consistency Assessment Program (RCAP).

March 25, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Fourth Update for March 2019

EBA published answers to five questions under the Single Rulebook question and answer (Q&A) updates for this week.

March 22, 2019 WebPage Regulatory News
News

ECB Updates Validation Checks and List of Identifiers Under AnaCredit

ECB updated the AnaCredit validation checks (Version 1.4) and the list of national identifiers (version 2.4) for AnaCredit reporting.

March 21, 2019 WebPage Regulatory News
News

BCBS Publishes Results of the Basel III Monitoring Exercise

BCBS published results of the Basel III monitoring exercise based on data as of June 30, 2018.

March 20, 2019 WebPage Regulatory News
News

EBA, FCA, and PRA Agree on MoU Template for Supervisory Cooperation

EBA, FCA, and PRA announced that they have agreed on a template for the Memorandum of Understanding (MoU) that sets out the expectations for supervisory cooperation and information-sharing arrangements between UK and EU/European Economic Area national authorities.

March 20, 2019 WebPage Regulatory News
News

HKMA Publishes CoP on Loss-Absorbing Capacity Requirements of Banks

HKMA issued, in relation to the Financial Institutions Resolution (Loss-Absorbing Capacity Requirements—Banking Sector) Rules (LAC Rules) a chapter of a code of practice (LAC CoP) under section 196 of the Financial Institutions Resolution Ordinance (FIRO).

March 20, 2019 WebPage Regulatory News
News

EBA Publishes Reports Monitoring the Implementation of Basel III in EU

EBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU.

March 20, 2019 WebPage Regulatory News
News

BCBS Publishes Results of Survey on Proportionality in Bank Regulation

BCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.

March 19, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2786