Breakthrough legislation for soured loans

06.12.2018 12:11

Breakthrough legislation for soured loans

banks

The EPP Group wants to require banks to reduce the number of non-performing loans while "keeping a realistic approach", said the EPP Group's Esther de Lange MEP, Parliament's Co-rapporteur on new rules for banks to keep a minimum loss coverage for non-performing loans (NPL).

"The corpses must get out of the closet in order to make our banking sector healthier and our financial system more stable. This is the aim of the Banking Union, the aim of the new law and the intention of the EPP Group in today's vote", explained de Lange after the vote in the European Parliament’s Economic and Monetary Affairs Committee, where MEPs decided on their position for the forthcoming negotiations with EU Member States.

"This is an important step forward as this legislation creates for the first time ever legally binding provisioning levels for new NPLs in all banks, next to the bank-by-bank requirements set by the Single Supervisory Mechanism (SSM). As this is a sensitive and complex matter, our approach is ambitious as well as realistic", de Lange MEP said.

"We want to improve the overall health of the EU's banking sector." Esther de Lange MEP
Esther de Lange MEP

In this legislation lays the key for preventing another banking crisis. This law is not only about Italy, it is about more than just Italy. Requests to focus only on bad banks would not be fair. All banks are treated equally", de Lange stressed. She insists that the current economic situation is an opportunity to solve the problem, which has accumulated over many years. "The economy is growing, the interest rate is still low. If in such sunny conditions we still don't do anything about the large amount of loans that are not or hardly collectible in the balance sheets of banks, then when?", she asked. "We want to improve the overall health of the EU's banking sector."

The European Commission proposed the NPL legislation in March to help EU banks reduce the €820 billion stockpile of soured loans on their balance sheets. Italian banks have outstanding loans of almost €300 billion.

Negotiations on the draft law with EU Member States are scheduled for 12 December.

Note to editors

The EPP Group is the largest political group in the European Parliament with 219 Members from 28 Member States

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