Non Perfoming Loans action plan

Today’s meeting of European finance ministers at the Council of the European Union will discuss the action plan for non-performing loans. Martin Konner, general manager of the banking association, warns to avoid contradictions.

Almost every month, the finance and / or economics ministers of the euro countries meet as part of the euro group and the EU countries in the Council of the European Union. It is considered one of the most powerful decision-making bodies in the EU. Topics such as

  • Economic policy coordination and surveillance.
  • Monitoring the budgetary policies of the Member States.
  • Euro: legal, practical and international aspects.
  • Tax policy.
  • Financial markets and capital movements as well as economic relations with third countries.
  • EU budget.

 

Action plan for non-perfoming loans

loans

At today’s meeting of the Council in Brussels, finance ministers discuss the action plan for non-performing loans (NPL)

Martin Konner, General Manager of the Banking Association, with a view to today’s EU Finance Ministers’ Meeting on dealing with non-performing loans (NPL). The Europick Bank published the final version of the NPL Guide on March 20, 2017. It outlines the supervisory expectations, but also best practices for dealing with NPL. Implementation in the institutes is expected in accordance with the principle of proportionality and with the required urgency.

 

Statement by Martin Konner, general manager of the banking association

bank loans

Regarding the meeting, Martin Konner, General Manager of the Banking Association, comments on the action plan as follows:

“The action plan for non-perfoming loans (NPL) discussed today in contains a large number of new regulatory requirements for European banks. Even if it is not yet clear which of these will ultimately be taken into account, the proposals should meet three basic requirements from the perspective of the banking association:

 

Take due account of existing regulation

This is the only way to avoid contradictions and double charges. Some of the suggestions can already be found in other regulations. For example, the international accounting standard IFRS 9 comes into force on January 1, 2018, which will lead to the fact that value adjustments – especially for NPLs – have to be expanded considerably, which in turn will directly reduce banks’ own funds.

 

proportionality

That means no excessive bureaucratic burden on small and medium-sized banks. This applies, for example, to the guidelines for smaller institutions to be drawn up by the national supervisory authority.

 

Avoid restrictions on banks’ lending options

A growing economy in Europe needs a stable banking system. This must be able to act efficiently and competitively. Possible new requirements for lending should take this into account and should not lead to restrictions on the financing of companies.

The proportion of non-performing loans in Germany is comparatively low at less than three percent. The German banks support the goal of reducing the share of NPL in southern European countries in particular, but in this country this should not be at the expense of the lending options of healthy banks.

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