Online seminar – The SSM approach to tackling NPLs
The latest online seminar by the Florence School of Banking and Finance featured a discussion on the action plan developed by the Single Supervisory Mechanism to tackle Non-Performing Loans (NPLs) in the Euro area.
Held on 19 September 2018 and entitled ‘The SSM approach to tackling NPLs: progress made and challenges ahead’, this online seminar featured as speakers leading experts in the field from the European Central Bank (ECB) and the Single Supervisory Mechanism (SSM): Ignazio Angeloni, Member of the Supervisory Board of the European Central Bank; Sharon Finn, Advisor on Credit Risk and NPLs at the SSM; Anne Fröhling, Head of Section at the SSM; and Giuseppe Siani, Deputy Director General of Microprudential Supervision IV at the SSM.
Non-Performing Loans – understood as loans on which a borrower doesn’t make interest payment or doesn’t repay the principal – have been on the policy agenda for quite some time now. The weigh on banks’ balance sheets, impact on their profitability and divert resources from more proactive use. NPL ratios have significantly dropped over the last years, yet Europe still displays significant geographic disparities on the matter. In the past years, there has been quite some regulatory and political activity around NPLs. Tackling NPLs has been one of the SSM priorities since its set up: in March 2017, it has issued its Guidance to Banks on Non-Performing Loans. Then, in July 2017, the ECOFIN Council has tasked a handful of EU actors to work on the file and come up with new guidelines to “address the existing stocks of NPLs as well as the emergence and accumulation of new NPLs on bank balance sheets, in particular in all four following policy areas (i) supervision, (ii) structural reforms of insolvency and debt recovery frameworks, (iii) development of secondary markets for distressed assets, and (iv) fostering restructuring of the banking system”. Ever since, the European Commission came out with its March package on NPLs while the SSM updated its Guidance document with an Addendum.
This online seminar presented the supervisory actions taken, outlined the results achieved so far, and discussed the challenges ahead.