ECB gets tougher on NPLs

Author: Amélie Labbé | Published: 9 Oct 2017

The European Central Bank’s (ECB) latest push to rid the eurozone of its persistent bad loan problem has seen it put forward additional proposed rules that would force banks to set aside more cash to cover the value of the non-performing loan (NPLs) on their books.

The ECB’s proposal is part of a planned consultation taking place between October and December on 'quantitative supervisory expectations for minimum levels of prudential provisions for new NPLs’. It aims to incentivise banks to address their bad loans once and for all, notably by forcing them to post collateral against the value of loans once these become non-performing.

Speaking at the Single Resolution Board’s annual conference on September 29 in Brussels, Danièle Nouy, chair of the ECB’s Single Supervisory Mechanism’s (SSM) supervisory board, said that the EU needed to see significant progress in addressing non-performing exposures.

"That’s one of...