ECB: Many banks have made progress on cutting NPL stocks

The European Central Bank (ECB) is out with its draft document on Non-performing loans (NPL), highlighting the following:

Prudent provisioning would apply to newly labelled NPLs

Many banks have made progress on cutting NPL stocks

Key Quotes:

“The prudential provisioning expectations will apply to all exposures that are newly classified as non-performing in line with the EBA definition as of 1 January 2018. These take into account the length of time a loan has been non-performing and the extent and valuation of collateral. More specifically, banks are expected to provide full coverage for the unsecured portion of new NPLs after 2 years at the latest and for the secured portion after 7 years at the latest.”