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
EC Adopts Financial Reporting Changes Arising from Benchmark Reforms
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HMT Updates List of Post-Brexit Equivalence Decisions in UK
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.
EBA Issues Erratum for Technical Package on Reporting Framework 3.0
EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.
APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets
APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.
EBA Publishes Risk Dashboard for Third Quarter of 2020
EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.
ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro
ECB concluded the public consultation on the introduction of a digital euro in EU.
ECB Finalizes Guide on Supervisory Approach to Bank Consolidation
ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.
SRB Chair Outlines Work Priorities for 2021
The SRB Chair Elke König published an article setting out work priorities for 2021.
FDIC Selects Companies to Compete in Final Phase of Tech Sprint
FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.
