EC Consults on Minimum Coverage Requirements Related to NPLs
EC issued a consultation on the minimum levels of capital that EU banks must set aside to cover incurred and expected losses on newly originated loans that turn non-performing. EC is gathering stakeholder views on the possible introduction of statutory prudential backstops against insufficient loan-loss coverage for new loans that turn non-performing as well as on the potential functioning, scope, design, and calibration of such prudential backstops. The consultation will be open until November 30, 2017.
This initiative follows the comprehensive action plan to tackle the issue of non-performing loans (NPLs) agreed by all EU member states at the ECOFIN Council in July. Insufficiently provisioned NPLs are more likely to remain on bank balance sheets, which in turn may cast doubts on banks' future profitability, solvency, and ability to lend. The consultation seeks stakeholders' views on the possible introduction of minimum coverage requirements that would put EU-wide brakes on new NPLs by ensuring sufficient loan-loss coverage and seeks targeted input on how such requirements can best be designed. This will feed into the impact assessment that the EC is carrying out on the possibility of introducing such new rules as requested by the Council Action Plan on tackling NPLs in Europe and announced in the EC Communication on completing the Banking Union. The consultation and the impact assessment will help the EC complete a report, along with any legislative proposals, if needed.
Related Links
Comment Due Date: November 30, 2017
Keywords: Europe, EU, Banking, NPL, Statutory Prudential Backstops, Minimum Coverage Requirements, Banking Union, EC
Previous Article
PRA Consults on Financial Management and Planning by InsurersRelated Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards