June 12, 2019

EC published the fourth progress report on the reduction of non-performing loans (NPLs) in banks in EU. The report shows that NPL levels are continuing their downward trajectory toward the pre-crisis levels. The ratio of NPLs in EU banks has come down by more than half since 2014, declining to 3.3% in the third quarter of 2018 and down by 1.1 percentage points year-on-year.

Despite clear improvements, high ratios of NPLs do remain a challenge in some member states and deserve continued attention. EC calls on member states and the European Parliament to accelerate work on the outstanding proposals to complement the EU actions to tackle this issue. Important strides have already been made toward full implementation of the EU Action Plan to tackle the high stocks of NPLs. However, EC calls on co-legislators to quickly agree on its proposed measures around the benchmarking of national loan enforcement and insolvency frameworks and to develop a sharper focus on insolvency in the European Semester process. Building on the December 2018 Euro Summit conclusions, this progress report on NPLs will inform discussions on the completion of the Banking Union at the next meeting of EU finance ministers on June 14.

Additionally, EC released a separate communication on the "Deepening of Europe's Economic and Monetary Union," inviting EU leaders to finalize the changes to the Treaty establishing the European Stability Mechanism and to make a renewed effort to advance toward the completion of the Banking Union. Toward the goal of deepening the Economic and Monetary Union, EC has also released factsheets on Banking Union and Capital Markets Union. 

 

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Keywords: Europe, EU, Banking, NPLs, Action Plan, Banking Union, Capital Markets Union, Economic and Monetary Union, EC

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