EC has approved, under the EU State aid rules, prolongation of the Italian guarantee scheme to facilitate the securitization of non-performing loans (NPLs). This authorization has been granted until March 07, 2019. The scheme was initially approved in February 2016 and last prolonged in September 2017.
Under the scheme, Italian banks meeting certain conditions will continue to be able to request a State guarantee on the lower-risk senior notes issued by private securitization vehicles that help them to finance the sale of their NPL portfolios. The more risky funding tranches of the securitization vehicles are to be sold to private investors and will not be guaranteed by the State. By assisting banks to securitize and move NPLs off their balance sheet, the scheme is an important component of Italy's strategy to tackle banks' asset quality problems and has already made a significant contribution.
Since its entry into force until June 2018, the scheme has been accessed six times by five banks, removing EUR 33 billion (gross book value) of NPLs from the Italian banking system, which corresponds to over 60% of the total reduction of NPLs in Italy during that period. EC assessment showed that, under the scheme as notified by Italy, the State guarantees on the senior notes will continue to be remunerated at market terms according to the risk taken—that is, in a manner acceptable for a private operator under market conditions. On this basis, EC was able to maintain its conclusion that the measure is free of State aid within the meaning of EU State aid rules.
Keywords: Europe, EU, Italy, Banking, NPLs, Guarantee Scheme, EU State Aid, EC
Previous ArticleIMF Publishes Reports on the 2018 Article IV Consultation with Spain
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.