Afme: ECB, Commission convergence needed for NPL progress

Author: Olly Jackson | Published: 27 Jul 2018

Securitisation could solve the ongoing European non-performing loans (NPL) problem. But there can only be full resolution if European Central Bank (ECB) and European Commission rules converge, amid fears that the low hanging fruit has already been picked.

Constance Usherwood, prudential director at the Association for Financial Markets in Europe (Afme) said that the NPL market is making positive progress, but to continue this way, more needs to be done.

"Banks have been securitising NPLs, but one or two participants I have spoken to say that the low hanging fruit has now been picked," she said.

NPLs in Europe have steadily declined in recent years, reducing from 7.5% of total loans at the height of the debt crisis in 2012 to 3.7% by the end of last year. There are fears that this progress could come to a standstill now the easiest bad loans have been securitised and regulatory uncertainty remains....