Coronavirus response: Commission holds round table to discuss comprehensive approach to tackling non-performing loans in the EU

The European Commission has organized a round table meeting with industry experts, and public authorities and institutions at national and European level, to prepare a co-ordinated European response to tackling non-performing loans (NPLs) that are expected to increase over the coming months, as a result of the coronavirus pandemic. In recent years, risks in the banking sector in Europe, as well as the level of NPLs, have been significantly reduced, thanks to the reforms carried out in the wake of the 2008 financial crisis.

While there has not been a renewed surge in NPLs at this stage – thanks in part to member states supporting the economy – the economic impact of the pandemic is expected to result in increases in NPLs and defaults.

An Economy that Works for the People Executive Vice President Valdis Dombrovskis (pictured) said: “History shows us that it is best to tackle non-performing loans early and decisively, especially if we want the banking sector to continue supporting Europe's economy. We now have a window of opportunity to make sure that we are as well prepared as possible to tackle increased NPLs over the coming months. We need to jointly develop a strategy that focuses on making sure that banks are in a position to support the real recovery – people and businesses. I look forward to discussing the broad range of views in the roundtable meeting today. These views will feed into our ongoing work in the Commission in developing a comprehensive approach to tackling non-performing loans in the EU.”

Topics for discussion in the round table included a possible approach to improve the usability of national Asset Management Companies (AMC), the state of play of the Commission's proposal for a Directive on credit servicers and credit purchasers, initiatives to improve data standardization and data infrastructure on secondary markets for NPLs, and a presentation of the Commission's recent proposal on the securitization of non-performing exposures (NPEs). The Commission will also organize an NPL expert group meeting with public sector stakeholders on 5 October.

The full speech by Executive Vice-President Dombrovskis is available online.

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