Ecofin sets out plan to tackle NPL problem, ‘blueprint’ for national bad banks available by end-17

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Ecofin sets out plan to tackle NPL problem, ‘blueprint’ for national bad banks available by end-17

How to align your NPL strategy to ECB NPL guidelines and Member State bad bank?

EU finance ministers agreed on Tuesday on a set of actions to be undertaken between now and end-2018 to reduce EU banks’ ~€1tr of NPLs. The Ecofin acknowledged that possible “negative cross-border spillovers” from high NPL ratios in some member states require a common EU strategy to address the problem.

Measures should both address existing stocks of NPLs and prevent a further accumulation of NPLs in the future, the press statement said.

It spelled out four areas of action:

  • supervision
  • structural reforms of insolvency and debt recovery frameworks,
  • development of secondary markets for distressed assets
  • fostering restructuring of the banking system. In particular, the EU

Commission (EC) has been tasked to publish by end-2017 a "blueprint" for the set-up of national asset management companies (i.e. bad banks) and to address how these could be compatible with current EU rules on bank resolution and state aid. In addition, the EC will prepare a “benchmarking exercise” (i.e. a country ranking) on the efficiency of national insolvency frameworks and will propose a common approach to foster the development of a secondary NPL market by summer 2018

Our team can help you align your NPL  and corporate development plan with ECB Guidelines, incorporating the upcoming bad bank option in your strategic approach. Do not hesitate to contact us.

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