Spain 
Italy 
Greece 
IMF Wants Speedier Court Rulings to Help Banks Get Rid of NPLs
13 September 2018
Delays in the liquidation of insolvent companies are “distorting competition and hampering the resolution of NPLs,” the IMF said.
Portugal’s banks have been attempting to clean up the bad debts on their balance sheets and so far, noticeable progress has been made. However, Portugal still has one of the highest levels of private indebtedness in the eurozone, and worse, the levels of bad debts continue to be higher than expected. Delays to court rulings regarding the liquidation of failed companies are believed to be a major factor in the lack of progress.
The International Monetary Fund’s (IMF) findings are contained in the report prepared by experts at the fund under Article IV, published on Thursday. In the document, the IMF points out that, 13.3% of the total amount of loans granted by Portuguese banks was considered non-performing loans (NPL), at the end of 2017. At the end of 2015, the MPL ratio in the Portuguese banking system stood at 17.5%.
The IMF, which is led by Christine Lagarde, has therefore called for the reduction of on-performing loans, especially for small and medium-sized enterprises (SMEs), “to remain at the top of the agenda of the Portuguese authorities.”
Two main aspects require improvement: “First, public creditors should participate in debt restructuring like other lenders, subject to clear and predictable guidelines; second, non-viable and insolvent companies should be liquidated quickly, so that the residual assets can be reused.”
Those responsible parties and creditors of these companies, the IMF believes, are not moving ahead with liquidation procedures promptly, “distorting competition and hampering the resolution of NPLs.”
Original Story: Economia Online – Rafaela Burd Relvas
Translation: Richard Turner