Soured loans: don't leave problem for next generation

14.03.2019 12:51

Soured loans: don't leave problem for next generation

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EPP Group wants to improve overall health of EU's banking sector

In a couple of weeks, European banks will be legally required to reduce the number of non-performing loans. “We want to solve the problem now. Don't leave the problem for the next generation. Banks have to get rid of soured loans, but we must keep a realistic approach without creating imbalances", said the EPP Group's Esther de Lange MEP, Parliament's Co-Rapporteur on the new rules for banks.

The European Parliament today approved a new law stipulating a minimum loss coverage for non-performing loans (NPL). "The EPP Group wants to improve the overall health of the EU's banking sector and make our financial system more stable. This is what we will achieve with the new law", explained de Lange after the final vote.

This law is key to preventing another banking crisis. Esther de Lange MEP
Esther de Lange MEP

“This law is key to 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 still growing, the interest rate is still low. If, in such sunny conditions we don't do anything about the large amount of loans that are not or hardly collectible on the banks' balance sheets, then when?”, she asked.

The European Commission proposed the NPL legislation in March 2018 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.

"I am proud that it took us only 12 months from the law proposal to the adopted law. Now we have, for the first time ever, legally-binding levels for new NPLs in all banks, next to the bank-by-bank requirements set by the Single Supervisory Mechanism", de Lange concluded.

Note to editors

The EPP Group is the largest political group in the European Parliament with 217 Members from 28 Member States