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