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Course on ‘Non-performing Exposures’

On 1-3 April 2019, the Florence School of Banking and Finance held an executive training course entitled ‘Non-Performing Exposures: Management Tools, Supervisory Profiles and Policy Goals’.

This course brought together different perspectives, including both policy-related and management-oriented aspects, on non-performing exposures (NPEs), which keep posing a threat to the stability and economic performance of many financial institutions and European countries. Still, they also represent a significant source of value, when carefully assessed and professionally managed. Expected recoveries can be reliably estimated, and future cash flows sold on the market, providing banks with a source of funding and additional income. Furthermore, de-risking bank balance sheets increases financial resilience and alleviates supervisory concerns.

The course was directed by Andrea Resti, Professor at Bocconi University, who introduced participants to subtleties of NPE definition and measurement, illustrating the situation in European Union across countries and over the years and presenting the models for estimating recovery rates.

The second day featured presentation by NPL experts from the private sector: Valentina Borgonovi from Unicredit, who presented the ways used at the bank to dispose of NPLs, higlighting the possible deals and discussing the lessons learnt from the italian case, and Laurence Bogni-Bartholmé fom Lowell Group, who discussed NPL servicing and work-out and provided a snapshot of the real estate collateral.

Additionally, Professor Resti discussed the link between NPL rations and bank performance, before introducing the available tools for policy makers, whose point of view was presented on the third day by Oleg Shmeljov from the European Banking Authority, who discussed the supervisory tools and initiatives and the activities led by the EBA, and by Markus Aspegren from the European Commission (DG FISMA) who discussed the creation of Asset Management Companies and the boundaries set by State Aid rules.