The Council of the EU has announced its conclusions on an action plan to tackle non-performing loans (NPLs) in the EU. In its conclusion, the Council, among other things, invites the following action:

  • the European Commission (Commission) to issue during this summer an interpretation of existing supervisory powers laid down in EU legislation with a view to clarifying their usability as regards banks’ provisioning policies for NPLs;
  • the Commission to consider, within the framework of the ongoing review of the Capital Requirements Regulation (CRR) / Capital Requirements Directive IV, prudential backstops addressing potential under-provisioning which would apply to newly originated loans;
  • the European Central Bank (ECB) together with national competent authorities within the EU Banking Union, to publish by the end of 2018, guidance on NPLs for less significant institutions. The guidance will be similar to the ECB’s guidance on NPLs for credit institutions within the meaning of Article 4(1) of the CRR but with targeted adaptations;
  • the European Banking Authority (EBA) to issue, by summer 2018, general guidelines on NPL management;
  • the EBA, the ECB and the Commission, to propose by the end of 2017, initiatives to strengthen the data infrastructure for NPLs and consider the setting-up of NPL transaction platforms in order to stimulate the development of the secondary market; and
  • the European Systemic Risk Board to develop, by the end of 2018, macro-prudential approaches to prevent the emergence of system-wide NPL problems.

View Council of the EU agrees non-performing loans action plan: financial services aspects, 11 July 2017