On 16 December 2020, the European Commission published its strategy to prevent a future build-up of non-performing loans (NPLs) across the EU, as a result of the COVID-19 pandemic.
The strategy has four main goals:
- Further developing secondary markets for distressed assets. A key step in this process would be the adoption of the Commission’s proposal on credit servicers and credit purchasers which is currently being discussed by the European Parliament and the Council.
- Reform the EU’s corporate insolvency and debt recovery legislation. The Commission urges the European Parliament and Council to reach an agreement swiftly on the legislative proposal for minimum harmonisation rules on accelerated extrajudicial collateral enforcement, which the Commission proposed in 2018.
- Support the establishment and cooperation of national asset management companies (AMCs) at EU level. Asset management companies are vehicles that provide relief to banks that are struggling by enabling them to remove NPLs from their balance sheets. The Commission stands ready to support Member States in setting up national AMCs – if they wish to do so – and would explore how cooperation could be fostered by establishing an EU network of national AMCs.
- Precautionary measures, given the special circumstances of the current health crisis, authorities have the possibility to implement precautionary public support measures, where needed, to ensure the continued funding of the real economy under the EU’s Bank Recovery and Resolution Directive and State aid frameworks.