On Monday 20 March, European Central Bank (ECB) published the final version of its guidelines on the treatment of non-performing bank loans (NPL) held by Eurozone banks in their loan portfolios.
The ECB, which does not set any quantitative targets, but presents possible measures and best practices, calls on the banks to adopt holistic strategies that may comprise a raft of policy options such as NPL work-out, servicing or portfolio sales.
These guidelines will now become part of the ECB's prudential dialogue with the banks it controls directly as single European supervisor within banking union in the Eurozone.
The ECB also calls on the Eurozone countries to adapt their legal frameworks in order to make life easier for banks in this field.
The European finance ministers will discuss the matter of non-performing bank loans at their informal meeting to be held in Valetta on Friday 7 and Saturday 8 April.
For its part, the European Commission is looking into the possibility of developing the secondary market in order to stimulate NPL liquidity (see EUROPE 11720). The European Banking Authority has also floated the idea of creating a specific European management fund (see EUROPE 116230.
At the end of 2016, the banking groups directly supervised by the ECB had a total of €921 billion in non-performing loans. In relation to national GDP, the countries most affected are Cyprus and Greece. In terms of value, NPLs are mostly present in Italy.
Consult the guidelines: http://bit.ly/2nCTEuE (Original version in French by Mathieu Bion)