The German Banking Industry Committee (Die Deutsche KreditwirtschaftDK) has issued comments on the ECB’s draft guidance to banks on non-performing loans (NPLs). According to DK the draft guidance goes largely beyond pure interpretation and application of existing rules. Instead, in many areas it sets standards and redefines terms that have already been given a legal definition (e.g. forbearance), which is at odds with the SSM Regulation No. 1024/2013, which requires the ECB to comply with relevant Union law and national legislation in its supervisory activity. To ensure consistency, the definitions used to date in the various guidelines, regulations and standards should be adopted and no divergent or contradictory aspects and explanations added. DK is of the opinion that some of the draft guidance, particularly the separation of high and low NPL banks, does not differentiate enough. DK would welcome clarification as regards the importance of the draft guidance for less significant institutions and emphasis on the principle of proportionality in order to avoid any confusion about the scope. Furthermore, some of the ECB’s proposals are seen by DK to be very far-reaching, and therefore it calls on the ECB to clarify at various points whether they are a minimum requirement or a best practice requirement. DK’s comments can be found here.