In July 2017, the European Council concluded an Action Plan to tackle non-performing loans (NPLs) in Europe. The EBA, along with other bodies and institutions, was invited by the Council to contribute to this Action Plan along four specific lines where the EBA´s proposal of the guidelines issued on 8 March 2018 relate to “supervisory actions to work with banks to improve strategies to reduce NPEs”. The aim of the proposed guidelines is to achieve a sustainable reduction of NPEs in credit institutions’ balance sheets.
The proposed guidelines take into account both the prudential perspective and fair treatment of customers. Credit institutions with elevated levels of NPEs should establish a NPE strategy, as part of their overall strategy, and related governance and operational arrangements. The proposal sets out guidance on the estimation of future cash-flows resulting from an active work-out of the exposure and/or the sale of collateral.
The guidelines are opened for public comments where the deadline is 8 June 2018. The EBA then aims to finalise the proposed guidelines during summer 2018. The guidelines should be implemented by 1 January 2019.
11-4-2018