NPL&REO News

Europe’s financial system remains fragile and fragmented

The European financial system remains fragile and fragmented due to the close relationship between sovereigns and banks, European Central Bank policymaker and Governor of the Bank of Spain Pablo Hernandez de Cos said.

«Investment portfolios are not well diversified and investment opportunities are lost as these may not always be matched with savers’ funds. The financial system remains fragile and fragmented because of the doom-loop between sovereigns and banks,» de Cos said during a conference in London.

The EU still lacks the necessary fiscal tools to cushion against asymmetric or large systemic shocks in the euro are, he said.

De Cos also noted that it was essential for policy makers to strengthen European regulators. «As European markets become more integrated and technologically complex, this is becoming a more essential element that policy-makers need to address,» he said.

Original Story:Reuters | Marc Jones 
Photo: FreeImages.com/Szymon Szymon
Edition:Prime Yield

ING puts PwC in charge of selling a €100 million NPL portfolio

The Spanish subsidiary of the Dutch group has put for sale a NPL portfolio, having PwC as advisor. Named “Project Silex”, the portfolio has gross nominal value of €100 million.

Including consumer and SME credits, even though some of the loans have collaterals, most of them are unsecured NPL, according to sources close to the operation.

This one more unsecured NPL portfolio to be put for sale over the last few months.

International funds specialized in the market have entered in Spain over the last few years, attracted by the growing in consumer credit at a pace of 20%. The country’s National Bank has already warned that «the accelerated growth in consumer credit could lead to higher increases in non-performance». According to Spain’s Central Bank latest figures, the NPL ratio stood at 3.2% last year for credit of durable goods and at 7% in the case of credit for the acquisition of other goods and services.

Original Story: El Confidencial | Oscar Gimenez
Photo:ING Site
Edition and Translation:Prime Yield

Greece has already sold 4,154 Golden Visas

Since beginning the sale of coveted “Golden Visas” that come with residency permits and European Union passports, Greece has peddled off 4,154 to wealthy foreigners while even members of the Diaspora often have to wait a year or longer for papers allowing them to live in the country.

That covered up to the end of March this year in a program where Greece – which has among the lowest eligibility limit – granted the visas to people investing at least €250,000 in property or other means.

Most of that has come in the purchase of apartments and homes for sale cheap during a nearly nine-year-long economic crisis, with many of them turned into short-term rentals like Airbnb, emptying whole neighborhoods in Athens of long-time residents and driving up rents to prohibitive limits.

The Golden Visa property purchasers don’t have to live in the units they buy and the Paris-based Organisation for Economic Co-operation and Development (OEC) said the schemes, that run in many European Union countries, are also being used by criminals to launder money and get passports allowing them to move freely around the bloc.

Visas can also be bought outright, with criticism there’s no vetting of applicants, by investing in Greek securities, such as shares of ATHEX-listed companies, Greek state bonds or with money deposited in Greek banks.

In 2018 alone, 1,399 such long-term residence permits were granted, the business newspaper Naftemporiki said in a report. Including dependents, the program numbers 11,445 people with Chinese nationals receiving 2,416 since the program began, followed by Russians and Turks.

Original Story: The National Herald 
Photo: FreeImages.com/ Toomas Järvet
Edition:Prime Yield

Portuguese banks Grant €734 million in home loans

In February, Portugal’s banks lent €734 million euros for home purchases, down 1.7% from January but up 8.6% from February of 2018, according to the latest figures release by the Bank of Portugal.

They lent €2.259 billion to companies in the month, 16.7% more than in February of 2018.

Among other loans to private individuals, banks provided €365 million in consumer loans, up 8.0% from January and up 2.0% from February 2018; for other purposes they lent €163 million, up 22.6% on the month and up 9.4% on the year.

In February this year, the average interest rate for home loans granted to individuals was 1.37%, down three basis points from January’s average rate.

For consumer credit and other purposes, average rates were 7.23% and 4.06% respectively.

Finally, the average rate for new loans to companies was 2.42%, against 2.41% in January.

Original Story:The Portugal News | TPN/Lusa
Photo: FreeImages.com/Miguel Saavedra
Edition:Prime Yield

Värde Partners will manage €800 million Sareb Residential Development Portfolio

Värde Partners, a leading global alternative investment firm, today announced an agreement with SAREB – The Management Company for Assets Arising from the Banking Sector Reorganisation – to manage a portfolio of over €800 million residential development assets in Spain.

As part of the transaction, certain Värde funds will also acquire a 10% stake in the newly-formed Bank Asset Fund (FAB) that will hold the assets. These last ones will be managed and developed by Aelca, a Spanish residential developer and asset management company owned by Värde.

«We are pleased to have been selected for his mandate by Sareb following a competitive evaluation process. We believe this underscores the remarkable quality of the Aelca platform and our team in Spain», said Francisco Milone, Partner and Head of European Real Estate at Värde Partners. «We look forward to establishing a long-term partnership with Sareb and converting these assets into thousands of homes across Spain».

In January 2019, Värde-owned Via Célere acquired the land bank assets of Aelca, making Via Célere one of the largest residential developers in Spain with a gross asset value of over €2.2 billion. Aelca continues to operate as an independent residential developer and manager.

Värde Partners established its office in Spain in 2014, now operating out of Madrid, and has invested $5.5 billion in real estate assets across Europe since 2016.

Original Story:Associated Press |PR/ Värde Partners
Photo: Varde
Edition:Prime Yield

Eurobank kicks off the sales of two REO portfolios

Themass sale of properties by banks is getting under way with Eurobank’s initiative for the concession of two major real estate owned (REO) portfolios with a gross nominal value of €120 million, ekathimerini.com reports.

Named “Opus” and “Star”, these portfolios contain residential andcommercial assets, and their progress will be the initial test for the market of major real estate managers.

“Opus” consists of 258 commercial assets with a gross value of €88 million euros, including offices, stores, industrial properties and warehouses, among others; of which 58% located in the Attica region. The bank has opened the data rooms for the package and nonbinding bids are expected by the end of the month.

“Star” consists of 685 properties, chiefly residential but also some that are commercial. Half of those assets are located on the Greek mainland outside the areas of Attica and Thessaloniki, and bids are expected by end-April.

Against the backdrop of a stable real estate market with some signs of price recovery, Eurobank’s move represents the first attempt at the mass liquidation of assets that are not associated with loans and are in the bank’s full ownership. It remains to be seen whether the fragmented Greek real estate market can attract the interest of major investment funds that might be interested in the group utilization of those assets mainly for tourism purposes through short-term rentals, the acquisition of the Golden Visa residence permit, or for use by students.

Eurobank’s initiative forms part of local banks’ efforts to rid themselves of the massive stock of properties in their ownership, and is an indispensable part of the plans for the reduction of nonperforming exposures submitted to the European Central Bank’s Single Supervisory Mechanism (SSM) through the next three years.

Original Story:Tornos News | News
Photo: Eurobank site
Edition: Prime Yield

Almost two thirds of Portuguese NPL is in the corporate segment

«The improving economic conditions are contributing to NPL reduction» in Portugal, underlines the rating agency DBRS.

The corporate segment was the one that contributed the most for the high non-performing loans (NPL) levels recorded in the national banking systems, being responsible for almost two thirds from the total stock.

Looking into the financial landscape, the Canadian rating agency recognises that the «risks for financial stability are lowering gradually», even though it assumes that «the high levels of corporate NPL and debt are still risks for the financial stability».

Supported by data released by Portugal’s Central Bank, DBRS highlights that the NPL ratio fell 8,5 basis points in 18 months, to 9.4% in 2018, stressing out that the Portuguese business sector was the one that contributed the most for the high NPL levels recorded by the country’s banking sector, being responsible for «almost two thirds from the total NPL stock». The Portuguese corporative total NPL remain “high”, standing at 18.5%, but below the 30% recorded back in 2016.

«The improving Economic conditions is contributing to the NPL reduction» in Portugal, said the rating agency.

Besides, DBRS also recognised the exposition from the Portuguese banks to real estate «constitutes almost 40% of the total assets». However, the rating agency warned that, «a strong housing prices increase may also be a reason of concern», though the «price rise had cooled down in 2018».

Last year, the NPL ratio stood below the 10% for the first time since June 2016, at 9.4%, and going 1,9 percentage points down from the previous quarter.

Original Story: Jornal Económico | António Vasconcelos Moreira
Photo: Bank of Portugal
Edition & Translation:Prime Yield

 

The Council of the EU adopted a new framework for banks NPL

The Council of the European Union (EU) have just adopted a new framework for dealing with banks’ bad loans.

The new rules set capital requirements applying to banks with non-performing loans (NPLs) on their balance sheets. The aim of the reform is to ensure that banks set aside sufficient own resources when new loans become non-performing and to create appropriate incentives to avoid the accumulation of NPLs.

A bank loan is generally considered non-performing when more than 90 days pass without the borrower (a company or a physical person) paying the agreed instalments or interest or when it becomes unlikely that the borrower will reimburse it. When customers do not meet their agreed repayment arrangements, the bank must set aside more capital on the assumption that the loan will not be paid back. This increases the bank’s resilience to adverse shocks by facilitating private risk-sharing, while at the same time reducing the need for public intervention. In addition, addressing possible future NPLs is essential to strengthen the banking union. It preserves financial stability and encourages lending to create growth and jobs within the Union.

On the basis of a common definition of non-performing loans, the proposed new rules introduce a “prudential backstop”, i.e. common minimum loss coverage for the amount of money banks need to set aside to cover losses caused by future loans that turn non-performing. Different coverage requirements will apply depending on the classifications of the NPLs as “unsecured” or “secured” and whether the collateral is movable or immovable.

The regulation will enter into force on the day following its publication in the Official Journal.

Source: EU Council | Press Release
Photo: FreeImages.com/Szymon Szymon

 

Mortgage credit expected to rise by 30% this year

Greece’s mortgage credit market is expected to recovery along this year, after several year of very low levels of activity. The major banks forecast a 30% growth rate in the new credit concession in 2019.

This comes after a 20% rise in the demand of new mortgage last year, with banks granting €320 million to home purchase in 2018, a figure that compares with the €260 million in new mortgage credit granted in the previous year.

According to bank numbers, the average mortgage loan amounted to €70,000 euros last year, while new issues are now made on stricter terms than in the past. A necessary condition is the borrower’s participation in covering at least 25% of the cost of the property acquired. The borrower’s contribution largely dictates the interest rate level, ranging from 4% to 5.5% for the purchase of a house, while for repair loans that are not secured against the property the rate ranges between 7% to 8%..

The state subsidy program Saving at Home (Exoikonomisi Kat’ Oikon) provided a further boost to the housing loans market last year, as banks disbursed an additional €40 million through the scheme, raising the total amount of new loans in the housing sector to €360 million.

Naturally, these figures are nowhere near the past highs recorded in this market, when bank funding powered the economy. However, the return of the credit sector to funding residential property purchases is generating optimism regarding both the increase in bank activity and the strengthening of the credit sector’s interest revenues, which in recent years had been in constant decline.

This improvement comes in the context of the property market recovery during the last couple of years, which Moody’s said will continue for at least the next 12 to 18 months.

In 2018 house sale prices rose 1.5% y-o-y in Greece. This was attributed to the increased flow of foreign investment and the improving macroeconomic environments. Moody’s added that this is also positive for the valuation of Greek bonds, banks and loans secured against real estate. The rise in real estate values is also set to offer borrowers additional incentives to refinance their mortgage loans, Moody’s estimated.

Original Story:Tornos News
Photo: FreeImages.com/Jonte Remos
Edition:Prime Yield

NPL stock sank to €25 billion boosted by portfolio sales

Since its June 2016 historic peak, of €50 billion, the non-performing loans (NPL) stock fell by almost 50%. This is due not only to write-offs but also to the sales of toxic assets portfolios.

The shrinking trend towards the NPL reduction continues within the Portuguese Banks. And much of it on the “free ride” from Novo Banco, which accelerated the sales of these toxic assets over the last year.

By the end of 2018, the total volume of NPL reached €25,8 billion, showing a 30% reduction from the €37 billion recorded just one year before, according to the latest data released by Portugal’s Central Bank (BdP).

In just one year the NPL stock retreated €11 billion, helping the NPL ratio to keep its downward trend, reaching 9.4% in the end of 2018, Bdp figures show.

Original Story: Jornal de Negócios | Rita Atalaia
Photo:  FreeImages.com/Armindo Caetano
Edition & Translation:Prime Yield

Bankia will sell more than €300 million in bad credit to vulture fund Blackstone

Over the next few weeks, Bankia should complete the sale to Blackstone of a non-performing developer credit portfolio with a gross value of €300 million.

According to the digital newspaper voxpopuli.com, the Spanish bank headed by José Ignacio Gorigolzarri had planned to disposal of non-performing assets spread in three different portfolios by the mid of this year, stressing out that this portfolio Bankia is now selling to Blackstone is the largest of those the bank is planning to sell over the first half of 2019 first.

The same source notes that with this acquision, the North American volture fund continues to increase its real estate portfolio in Spain. Over the last five years, Blackstone has already invested around €24,0 billion in Spain, most of which in the acquisition of mortgage credit and real estate assets, including hotels and offices complexes.

Original Story: El Boletin | E.B.
Photo: Bankia Site
Edition:Prime Yield

Greek banks eliminate emergency borrowing from Bank of Greece

Greek banks’ full repayment of emergency liquidity assistance (ELA) drawn from the domestic central bank is credit positive as it reduces their funding costs, ratings agency Moody’s said in a credit outlook report.

Greek banks’ outstanding ELA balance was around €1.0 billion at the end of December, or about 0.4% of the banking system’s total assets, down sharply from a peak of €86.8 billion reached in June 2015 at the height of the debt crisis.

Deleveraging, coupled with the gradual return of deposits, helped banks improve their funding profile, allowing them to fully repay the emergency funds they borrowed from the Bank of Greece over the past three and half years.

«Without their dependence on ELA and given the sustainable improvement in liquidity conditions, Greek banks will likely attract greater interest from international unsecured bond investors,» Moody’s said.

It said Greek banks were also able to repay the ELA balance by increasing their interbank repo transactions as international banks’ appetite for Greek assets gradually increased over the last years.

The ELA repayment helps to strengthen depositors’ confidence in Greek banks, allowing them to attract more deposits. Between June 2015 and February 2019, private-sector deposits rose by about 8% as market sentiment, economic activity and employment began to improve.

More expensive than borrowing from the European Central Bank, the ELA’s full repayment helps lenders to diversify their funding mix.

«Greek banks started issuing covered bonds as an alternative source of funding to repay their ELA balance amid increased appetite among international investors for Greek banking risk,»the report said.

National Bank was the first of the large Greek banks to fully eliminate its ELA exposure in December 2017, followed by Piraeus Bank in July 2018.

Last month Alpha Bank told investors it had fully eliminated its ELA in February as did Eurobank. The two lenders were the last of Greece’s four big banks to fully eliminate their emergency borrowing from the Bank of Greece.

Much smaller Pancretan Cooperative Bank fully repaid its ELA exposure in August 2017, while Attica Bank repaid its exposure in the second half of March this year, Moody’s said

Original Story: Reuters | George Gerogiopoulos
Photo: Bank of Greece
Edition:Prime Yield

Portugal banks’ NPL ratio shrinks to 11%, says Fitch

Portuguese banks should take advantage of the benign economic and political environment to accelerate along this year the cleaning of the problematic assets still standing in their balance sheets, Fitch advises.

«2018 was another year of significant balance sheets’ cleaning for the largest Portuguese banks», underlines the rating agency Fitch, adding that its non-performing loan (NPL) ratio fell to 11% by the end of the last year, four percentage points below 2017.

Analysing the results of Portugal’s major banks – BPI, BCP, Banco Montepio, Caixa Geral de Depósitos, Novo Banco and Santander Totta -, Fitch explains this improvement in the NPL ratio was due to a «mix of credit cures, write-offs and active portfolio sales». According to the agency, these banks can benefit from the «benign economic and political environment in 2019 to accelerate their problematic assets’ reduction, including real estate assets and problematic estates».

By the end of September, the Portuguese banks held more than €30 billion in toxic assets in their balance sheets, according to data from Banco de Portugal (Portugal’s Central Bank).

Fitch also adds that the financial institutions provisioning efforts will continue along this year, «since Europe’s Central Bank (ECB) requires higher NPL coverage ratios». «This will hinder the sector’s already weak profitability», stresses the rating agency. «However, the Portuguese banks will have a relatively long transition period to improve their NPL coverage ratio» it says, adding that the sector’s coverage ratio stood above 50% in the end of 2018.

Original Story: ECO | Alberto Teixeira
Photo: FreeIamges.com/LotusHead
Edition & Translation:Prime Yield

BBVA launches new loan interest rate linked to borrower’s digital maturity

Spanish bank BBVA is introducing a new type of corporate loan that sees its interest rate decline as the borrower makes progress towards «digital maturity».

As firms across industries face up to the digital revolution, BBVA is looking to give them an added incentive with its new D-Loan.

The price of the loan is linked not only to the borrower’s credit profile but also its digital maturity, which is determined after analysis from a consulting firm. Borrowers and lenders agree on digital score targets throughout the life of the financing and if these are met, the loan pricing is reduced.

Singapore-based food and agri-business outfit Olam International is the first to sign up for a D-Loan, a $350 million revolving credit facility involving BBVA and six other banks.

Boston Consulting Group is carrying out the digital analysis, which will be revised each year, taking into account things such as the priority given to digitisation within the company, different initiatives and roadmaps implemented, digital marketing models, and how innovation is fostered.

Ricardo Laiseca, head, global finance, BBVA, says: «We believe that companies that undertake a digital transformation will be the winners in their sector in the long term; digitisation translates into greater competitiveness and profitability, which will allow these companies to be ahead of the competition

Original Story:FINExtra | News
Photo: BBVA site
Edition: Prime Yield

Bank of Portugal cuts 2019 growth forecast as exports slow

The Bank of Portugal downgraded its projections for the country’s economic growth this year, saying that it sees gross domestic product (GDP) swelling by 1.7%, while maintaining projections for 2020 and 2021, when growth is seen slowing to 1.6%.

In its March Economic Bulletin, central bank reduced its 2019 growth forecast by 0.1 of a percentage point from the 1.8% it had been projecting in December, citing a global slowdown and international trade tensions. It sees growth staying at 1.7% in 2020, before slowing to 1.6% in 2021 – the latter figure in line with previous projections.

The slight downward revision in 2019 GDP is, according to the bank, related to the greater dynamism of imports than exports, which will result in a «negative trade balance in goods and services from 2020».

However, it anticipates a maintained «surplus on the current and capital balance, along the projection horizon, with an important contribution from European Union transfers in this period».

The projection for inflation was also revised down by the bank, by 0.6 of a percentage points in 2019, to 0.8%, and by 0.3 of a point in each of 2020 and 2012, to 1.2% and 1.3% respectively.

The report foresees export growth of 3.8% in 2019, 3.7% in 2020 and 3.6% in 2021, thanks to stronger external demand directed to the Portuguese economy plus small gains in market share, mainly associated with tourism. However, it notes, growth «should slow down along the projection horizon» as it did last year.

Imports, meanwhile, are expected to swell 6.3% this year, 4.7% in 2020 and 4.1% in 2021.

As for employment, it is projected to continue to grow, albeit at a gradually slower pace, reflecting «the maturation of the economic cycle and the increase in restrictions on the level of labour supply».

The jobless rate – which averaged 7% last year – should fall to 5.2% by 2021, according to the report.

In the report, the bank also notes continuing risks and constraints specific to Portugal in the medium and long term – demographic, technological and institutional – as well as the high levels of indebtedness of economic agents. Against that background, it argues, «it is essential to create conditions that promote increased productivity through better allocation of resources, the smooth functioning of product and labour markets and the commitment to human capital and innovation.»

Original Story:Macau.Business | Lusa
Photo: Free Images.com/Pasqualantonio Pingue
Edition:Prime Yield

Profits fall sharply at Alpha and NPG on NPL reduction

Greek lenders Alpha Bank and National Bank reported a sharp fall in profit in the last quarter of 2018 as they focused on reducing their piles of bad loans.

Alpha, Greece’s fourth-largest lender by assets, reported a net loss from continuing operations of €0.4 million in the October to December period after a net profit of €41.1 million in the third quarter. The lender, which is 11% owned by the country’s bank rescue fund HFSF, attributed the loss to weaker trading gains and higher credit-loss provisions.

Net profit from continued operations at National Bank (NBG), the country’s second largest lender, shrank to €1 million from €8 million in the third quarter as trading losses weighed on its bottom line.

Greek banks are working to reduce their bad debts and meet targets on so-called nonperforming exposures (NPEs) agreed with European Central Bank regulators.

Alpha CEO Vassilis Psaltis said in a statement that reducing NPEs – which include nonperforming loans (NPL) and other credit likely to turn bad – and delivering competitive services were the bank’s priority.

The bank goal is to reduce its NPEs by €14.3 billion by 2021, he said. In the meanwhile, Alpha bank’s NPL ratio dropped to 33.5% of its loan book from 34.1% at the end of September, while provisions for impaired credit rose to €669 million from €296 million in the third quarter.

As for NBG’s, the NPE ratio fell to 40.9% from 42.2% in the third quarter and the lender aims to squeeze it to below 15% by 2021. CEO Paul Mylonas said in a statement that would mean an €11.5 billion reduction by the end of 2021, with €4.5 billion of that coming this year. He also described the new strategy for managing bad loans as front-loaded and more ambitions.

Original Story:Ekathimerini | Reuters
Photo: Alpha Bank
Edition:Prime Yield

Eurozone «not resilient enough» to weather another economic crisis, the IMF warns

The eurozone is in better financial shape than a decade ago, but not solid enough to withstand another economic crisis, the head of the International Monetary Fund said.

IMF Managing Director Christine Lagarde told a Paris conference that the currency union «is not resilient enough» to emerge unscathed from «unexpected economic storms»

Lagarde acknowledged that the currency union was now «more resilient» than a decade ago when the global financial crisis struck. «But it is not resilient enough,» she said.

«Its banking system is safer, but not safe enough. Its economic well-being is greater overall, but the benefits of growth are not shared enough,» Lagarde told the gathering, which was organised by the French central bank.

The warning comes as signs are multiplying of slower economic growth, especially in powerhouse Germany and the bloc’s second-biggest economy, France.

On March 29th, indications of a weak first quarter for the eurozone mounted as a closely-watched survey pointed to March output being dragged further down by manufacturing weakness. Manufacturers in the 19-nation single currency bloc «reported their steepest downturn for six years» as pressure mounted from trade wars and Brexit fears, data company IHS Markit said.

On Wednesday, march 27th, the European Central Bank added to growth worries when its chief Mario Draghi hinted that interest rates would stay low for longer than previously anticipated, to stimulate growth and inflation.

«Some can rightfully argue that Europe has been slow to produce a fully developed financial ecosystem», Lagarde warned, saying Europe was still wounded from the last crisis.

«These events left painful economic scars on many households and companies, sowing the seeds of economic disparity across member countries and within», she said, adding that «now is the time to give euro area finance another big push».

She called for the eurozone to «show new resolve and complete the banking and capital markets unions, so it can harvest the benefits now and in the future».

On banks specifically, she said «we need a European banking system that can bend in a storm without breaking, we need a banking system that will truly diversify risks across the ecosystem and irrigate growth».

Original Story:France 24 |  APF
Photo: FreeImages.com/Szymon Szymonn
Edition: Prime Yield

Non-performing credit grows for the first time in almost 18 months

For the first time in almost 18 months, in January Spain’s Non-Performing Loans (NPL) stock increased from the previous month, going 0.2% up to €67.330 million and breaking the downward trend that had been recorded since July 2017, data from Banco de España show.

However, Spain’s NPL volume is now 28% bellow the stock recorded in January 2018, keeping the same homologous trend than the previous months. As for the total credit stock there was also a monthly decrease of 1% in January, standing at €1,141 billion – a 3.5% y-o-y decrease.

According to these latest figures released by Spain’s Central Bank, there has also a slight increase in the NPL ratio, from 5,84% in December to 5,89% in January, with this indicator growing for the first time since January 2018.

Original Story: La Vanguardia | Oscar Gimenez
Photo: Banco de Espana
Translation & Edition:Prime Yield

 

 

Greek banks contemplate even more ambitious NPL reduction target

Continuing pressure by the Single Supervisory Mechanism (SSM) has reportedly reinvigorated Greece’s systemic banks’ efforts to reduce the Olympus-sized «mountain» of «bad debt» burdening their balance sheets, in the wake of the most recent ECB report showing Greece with the highest percentage of NPLs amongst all Eurozone member-states, naftemporiki.gr reports.

According to several sources quoted by “Naftemporiki”, new targets to reduce NPLs will be announced by the end of the month, with a comprehensive plan to again be handed to the SSM. The same reports point to even more «ambitious» targets for Greece’s thrice bailed-out systemic banks.

An addendum will also, according to reports, include new NPLs created after April 2018.

The previous target, which is far from being attained, called for a reduction of NPEs (non-performing exposures) of €50 billion by the end of 2021, bringing bad debt listed on banks’ balance sheets from €82 billion to €32 billion.

At the same time, bank officials in Athens have repeatedly noted that it is extremely difficult to exceed a rate of reducing NPLs by more than €3 billion every trimester.

Original Story: Tornos News
Photo: FreeImages.com/Takis Kolokotronis
Edition:Prime Yield

EC Member States agree new rules to develop secondary NPL market

The European Commission welcomes the agreement by EU Member States on new measures to reduce high stocks on non-performing loans (NPL), by developing secondary markets for sales of these problematic assets while maintaining a high level of borrower protection.

As part of the efforts todeliver on the Council’s Action Plan to tackle NPLs in Europe, the new measures will encourage the development of a secondary market where banks can sell their NPLs to credit servicers and investors, thereby contributing to a reduction in high stocks of NPLs in the EU, a remaining legacy risk from the financial crisis. «This is essential for the financial stability of the EU and it is a crucial factor for completing the Banking Union», says the European Comission in a press release.

Valdis Dombrovskis,Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union said this agreement «is a further step towards reducing non-performing loans in Europe and increasing the resilience of the European banking sector. I am counting on swift progress on the discussions of our proposed rules in the European Parliament. These rules allow us to progress towards reinforcing the Economic and Monetary Union».

The Directive introduces a harmonised and less restrictive regime for credit purchasers and servicers and removes undue impediments to cross-border activity, while ensuring that the same level of consumer protection is maintained when a loan is sold by a bank. While today’s agreement is an important step forward, progress has been regrettably slower on complementary elements of the Directive that would increase the efficiency of enforcement regimes. Further work and discussion on these elements will be needed and should be prioritised in the next legislative cycle. But given the urgent need to foster development of a well-functioning secondary market for NPLs, the draft rules approved by Member States today should still be finalised in the current legislative cycle.

Original Story: European Commission – Daily News
Photo:European Comission
Edition: Prime Yield

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