The stock of gross non-performing loans (NPL) in the European Union represented just 3.7% of total bank assets at the end of 2017 and this ratio, which is below the global average, suggests that “NPLs are no longer a specific European problem”, according to a report providing an overview of the sector and published by the European Banking Federation (EBS) on Tuesday 11 September.
With the NPL ratio having halved since 2012, to a stock of €832 billion in 2017, less than one quarter of the stock - a range between €150 and €200 billion - is still a problem, according to the report.
This concerns NPLs that are not provisioned and do not benefit from any assets to act as collateral and feature on the balance sheet of banks established in a country in which the stock of NPLs has returned to a low level following a post-financial crisis peak (category 2 of the European Commission - Austria, Spain, Estonia, Hungary, Latvia, Lithuania, Poland, the Czech Republic and Slovakia), or in a country in which stocks of NPLs remain high (category 3 - Bulgaria, Cyprus, Croatia, Greece, Ireland, Italy, Malta, Portugal, Romania and Slovenia).
At the European Parliament in July, the German finance minister, Olaf Scholz, said that gross NPLs should be less than 5% before the European Stability Mechanism (ESM) is authorised to take on the role of backstop for the Single Resolution Fund (SRF), the financial arm of Banking Union in the Eurozone (see EUROPE 12061).
In March, the European Commission announced several measures to reduce the stock of NPL in the EU (see EUROPE 11981).
The report also notes that bank deposits of businesses and individuals, which are up by 2.5%, stood at €16,300 billion at the end of 2017, of which €12,100 billion was in the Eurozone. The increase was sharper for businesses.
More information is available at: https://bit.ly/2QlCPzu. (Original version in French by Mathieu Bion)