European Council Publishes Final Compromise Text for NPL Regulation
European Council published final compromise text on the proposal for a regulation amending the Capital Requirements Regulation or CRR (Regulation 575/2013) regarding the minimum loss coverage for non-performing exposures (NPL Regulation). The proposal, initially put forward by EC in March 2018, aims to create a prudential framework for banks to deal with new nonperforming loans (NPLs) and thus reduce the risk of their accumulation in the future. It provides for requirements to set aside sufficient own resources when new loans become non-performing and creates appropriate incentives to address NPLs at an early stage. On the basis of a common definition of NPLs, the proposed new rules introduce a "prudential backstop"—that is, common minimum loss coverage for the amount of money banks need to set aside to cover losses caused by future loans that turn non-performing. In case a bank does not meet the applicable minimum level, deductions from banks' own funds would apply.
On December 18, 2018 co-legislators had reached a provisional agreement, which resulted in the final compromise text that has been published now. The General Secretariat is inviting the Permanent Representatives Committee to:
- Approve the text of the proposal for the NPL Regulation, as set out in annex to the note with a view to reaching an agreement at first reading with the European Parliament
- Give to the Permanent Representatives Committee chairman the mandate to inform the chair of the European Parliament's Economic and Monetary Affairs Committee that, should the European Parliament adopt the text of the proposal in the exact form as set out in the annex to the note, the Council would adopt the proposed regulation thus amended.
Related Link: Final Compromise Text on NPL Regulation on Prudential Backstops (PDF)
Keywords: Europe, EU, Banking, NPLs, NPE, Prudential Backstops, CRR, NPL Regulation, European Council
Previous Article
BOG Publishes Update on Status of Banking Sector Reforms in GhanaRelated Articles
Regulators Fine Goldman Sachs for Risk Management Failures
FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).
Canada Hosts International Conference of Banking Supervisors
BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.
FCA Proposes More Measures to Help Insurance Customers Amid Crisis
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.
EBA Issues Opinion to Address Risk Stemming from Legacy Instruments
EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.
ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020
ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).
HM Treasury Publishes Policy Statement Amending Benchmarks Regulation
HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.
APRA Initiates Action Against a Bank for Liquidity Compliance Breach
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.
PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2
PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).
US Agencies Finalize Rule to Reduce Impact of Large Bank Failures
US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).
US Agencies Finalize Rule on Net Stable Funding Ratio Requirements
US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.
