Featured Product

    Danièle Nouy of ECB on Addressing the NPL Issue in European Banks

    March 01, 2018

    Danièle Nouy of ECB spoke at the Delphi Economic Forum on the opportunities and challenges for European banks. She highlighted that non-performing loans (NPLs) represent one of the key challenges for European banks and explained the goals of the draft addendum to the guidance on NPLs, which ECB published in October 2017.

    She said: "The addendum sets out how we expect banks to provision new NPLs. And here, two things are important but sometimes misunderstood. First, the addendum is about new non-performing exposures. Second, banks will not have to fully provision these loans right away. Unsecured loans that become non-performing will need to be fully provisioned after two years; secured loans after seven years." The addendum is intended to prevent a recurrence of the NPL problem. ECB has assessed the comments received on the consultation and will adapt the addendum accordingly. The legal concerns that were raised will be taken into account, the cut-off date will be shifted, and the final addendum will be published later this month, added Ms. Nuoy.

    She mentioned that NPLs are not just an issue for banks and supervisors. The legal and judicial frameworks should also be enhanced to facilitate a more rapid resolution of NPLs. This includes action in areas such as insolvency regimes, debt enforcement, and out-of-court restructuring. In these areas, Greece has passed new laws, which is encouraging. However, passing laws is just the first step, as these laws also need to be implemented and applied. NPLs are the weakest link in the Greek banking system and it is crucial that Greek banks clean up their balance sheets. The upcoming stress test for banks will also play a positive role in this. EBA will conduct a stress test on 37 banks in the euro area, including the four significant Greek banksFor Greek banks, the stress test will be conducted earlier than for the other banks. While the results of the EBA sample will be published in November, the results for the Greek banks will be published in May, before the end of the stability support program. She concluded that, although the banking sector faces a number of challenges, conditions for dealing with these challenges "are very promising."


    Related Links

    Keywords: Europe, Banking, NPL, Addendum, Stress Testing, ECB

    Featured Experts
    Related Articles
    News

    FED Adopts Proposal to Implement Reporting Form for SCCL

    FED adopted a proposal to implement the Single-Counterparty Credit Limits (SCCL) reporting form (FR 2590; OMB No. 7100-NEW).

    November 20, 2019 WebPage Regulatory News
    News

    FED Proposes to Extend Initial Compliance Dates Under SCCL Rule

    FED published a proposal to extend, by 18 months, the initial compliance dates for foreign banks subject to the single-counterparty credit limit (SCCL) rule.

    November 20, 2019 WebPage Regulatory News
    News

    CBIRC to Strengthen Supervisory and Policy Support for SME Services

    CBIRC released a notification on strengthening supervision and guidance to enhance the quality and efficiency of financial services for "small and micro-enterprises" (SMEs).

    November 20, 2019 WebPage Regulatory News
    News

    APRA Publishes Approach to Regulating and Supervising GCRA Risks

    APRA published an information paper that sets out a more intensive regulatory approach to transform governance, culture, remuneration, and accountability (GCRA) practices across the prudentially regulated financial sector.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Update Rule on Derivative Contracts Exposure Calculation

    US Agencies (FDIC, FED, and OCC) announced a final rule updating the way certain banking organizations are required to measure counterparty credit risk for derivative contracts under their regulatory capital rules.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Amend Treatment of HVCRE Exposures

    US Agencies (FDIC, FED, and OCC) finalized a rule to modify the treatment of high volatility commercial real estate (HVCRE) exposures, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Changes to Rule on Supplementary Leverage Ratio

    US Agencies (FDIC, FED, and OCC) finalized changes to the capital requirement for banking organizations predominantly engaged in custodial activities, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    News

    IAIS Consults on Guidance on Liquidity Risk Management for Insurers

    IAIS is seeking feedback on the draft application paper on liquidity risk management for insurers.

    November 19, 2019 WebPage Regulatory News
    News

    IAIS Publishes Application Paper on Recovery Planning

    IAIS published the final application paper on recovery planning, along with the resolution of comments on the draft application paper.

    November 18, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of November Meeting of RCG for MENA Region

    FSB published a summary of the November meeting of the Regional Consultative Group (RCG) for Middle East and North Africa (MENA).

    November 17, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4174