"Non-performing loans are a problem for the banking industry for which solutions have until now been mainly defined at the national level", said Toomas Tõniste, minister for finance of Estonia, which currently holds the Council presidency. "We need to free up these resources, make our financial system more resilient and prevent the re-emergence of NPL issues in the future".
NPLs are bank loans that are subject to late repayment or unlikely to be repaid without requiring the sale of collateral.
The financial crisis and ensuing recessions have left banks in some member states with particularly high levels of NPLs. These can generate negative cross-border spill-overs and can affect market perception of the EU banking sector. High NPL levels can drag heavily on investment, and hence on the economy.
Resolving NPLs, on the other hand, can help reduce financial fragmentation and facilitate capital flows within the single market.
On the basis of an expert report, the Council highlighted the need for action as regards:
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bank supervision;
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the reform of insolvency and debt recovery frameworks;
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the development of secondary markets for NPLs ('distressed assets');
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restructuring of the banking industry.
Press release
2017 Council conclusions on non-performing loans in the banking sector
2017 report of the FSC subgroup on non-performing loans
Eurogroup meeting_10_07_2017
Remarks by Jeroen Dijsselbloem
© European Council
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