30 September 2017
The European Central Bank Surveillance will publish soon some quantitative guidelines about its “expectations” concerning the reduction of bad loans stocks of the banks in the eurozone. It was stated yesterday by the president of Ssm, the supervision body of the European Commission, Danièle Nouy. According to Il Sole 24 Ore, the announcement might come in the next few days and it should include a document to be submitted to the interested parties, as per usual practice for the majority of interventions by the ECB banking surveillance. The ECB published last March some guidelines for the banks regarding the reduction of non performing loans, as reminded by the Head of surveillance of the eurozone. Now, these rules might be integrated with more precise and probably more strict quantitative indications.
Ms. Nouy said at a conference in Bruxelles that “for us, the expectations are a rather strong indication”. The head of surveillance of the eurozone has declared that “now that the economic situation has improved, we need to see a significant progress” in the reduction of non performing loans. In Italy, one of the countries with the highest number of bad loans, the statistics have shown that the stock is reducing, thanks to the transfer operations, the most important one was that of Unicredit, and thanks also to the improvement of the economic situation. However, there is the fear that an acceleration in the reduction of NPLs might cause problems to banks’ financial statements, obliging them to sell credits at very low prices.
In Portugal, another country with a high percentage of NPL portfolios, the three biggest banks, Millenium Bcp, the public bank Caixa Geral de Depositos, and the Novo Banco (born from the bankruptcy of Banco Espirito Santo) announced yesterday the creation of a common platform to manage bad loans. The three banks represent the majority of the impaired loans of the banking system, assessed around 25-30 billion euro. According to the three banks, the purpose of the platform is to “speed up the reduction process of exposure to NPL”. This mechanism will permit a better coordination and a more efficient and quicker reorganisation process of the credits and of the companies debtors, encouraging the recovery of these latter. The platform, which should go live in December, doesn’t imply public interventions or guarantees, and the NPLs will stay on the books of the single banks. This approach is different from that of Spain, where a “bad bank” was created with the public support, and of Italy, where the Government intervened on each bank.
In Bruxelles, Ms. Nouy repeated the request of ECB for the completion of a union of banks, after the implementation of a common surveillance and resolution mechanism, with the creation of a common scheme to secure deposits. Peter Praet, Councillor at ECB, in an interview to “Les Echos” stated that “at this stage, the union of banks is still a group of national systems”, and that too much responsibility still remains at national level, especially for what concerns public interventions.
Translator: Cristina Ambrosi