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she Nena Malliara
European Platform for Debt Neutral Operations, proposes to the European Commission to accelerate the reduction of unproductive loans.
Presenting today the report on the state of progress of risk reduction in the Banking Union, the Commission stresses that the number of non-performing loans has further declined for the year. to establish at 3.4% at the end of the second quarter of 2018, down 1.2% from one year to the next.
NPLs of systemically important banks declined over the same period from about 1% to 4.4%. The expected coverage rate also improved in the second quarter of 2018 to reach 59%. Other long-term statistics indicate that the NPL is close to pre-crisis levels.
However, as indicated in the Commission's monitoring report, the total volume of non-performing loans in the European Union remains at 820 billion. non-performing loans ranging from 0.6% to 44.9%, and slow progress in some member countries to remain a cause for concern.
Structural barriers hinder a faster decline in NPLs, while restructuring, insolvency and debt restructuring processes remain very slow and unpredictable in some cases.
The European Commission notes that nonperforming loans in the secondary market are increasing in some member countries, supported by policy measures, although this activity is not sufficient to support efforts to structurally reduce non-performing loans.
"The continued growth of the secondary market is encouraging and growing in some countries as banks sell large non-performing loan portfolios, which attracts both investors and trading volume.
In the sense of a strengthening of the non-performing loan market, functional trading platforms on non-performing loans could improve the liquidity and efficiency of the secondary market for non-performing loans in Europe ", he said. -he declares.
The European Platform of NPL
In the July 2017 action plan, the European Central Bank, the European Banking Authority (EBA) and the European Commission have called on the Member States to consider creating a platform to strengthen the secondary market for unproductive loans. This European Commission report is accompanied by the document of the tripartite working group (Commission plus ESF and ABE), which explores the possibility of creating such a platform and its functioning.
A European trading platform for non-performing loans would be an electronic marketplace where non-performing loan sellers and interested investors could exchange information and exchange.
Such a platform could potentially remedy some sources of failure in the secondary market of NPLs, such as asymmetric information between sellers and buyers, as well as high transaction costs.
As a result, this could help banks to increase nonproductive loan sales as well as current prices, facilitate investor access to the NPL market, and allow banks to ensure that NPLs clean up their NPLs more quickly. balance sheets.
It should be noted that this platform would be a permanent channel for channeling NPLs, as it would not only cover existing loans but also nonperforming loans, thus preventing the accumulation of large volumes of NPLs in the future. ;to come up. In this way, it would be an essential tool that would contribute to a lasting solution to the problem of non-performing loans in Europe.
The European Commission today also called on the financial sector to participate in the debate on the launch of a pan-European platform for non-performing loans, asking them to develop specific standards for these platforms by the spring of 2019. Together with the ECB and EBA, the Commission will continue to play a key role in facilitating the adoption of measures to highlight the urgency of create pan-European platforms for NPLs.
Set of measures for the ambitious reduction of non-performing loans
In March 2018, the Commission adopted an ambitious package of measures to reduce non-performing loans, which includes the following key points:
1) Proposal to amend the existing Capital Requirements Regulation (CRR) by setting uniform minimum levels for the funds that banks will have to bear for future losses due to non-performing loans. If a bank does not respect these minimum levels, a reduction will then be made on its own funds.
2) Proposal for a directive on debt managers, purchasers of debt and the recovery of collateral. This directive will have two objectives:
(a) ensure more effective recoveries of collateral on secured loans, thus facilitating the out-of-court coercion of secured loans. It should be noted that this will only concern "red" business loans and is excluded from consumer spending.
(b) removing obstacles for debt management companies and the transfer of NPLs from banks to third parties throughout the EU; Consumer protection is guaranteed by legal safeguards and transparency rules so that the transfer of loans does not affect the rights and interests of borrowers.
3) Technical guidance on how to create badet management companies (AMC) in accordance with EU state aid rules.
The legislative part of this package is currently being discussed in the European Parliament and the European Council. The Council agreed and the Commission expects a similar agreement from Parliament to structure the final agreement before the end of the current legislature.
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