The EESC welcomes the proposals on non-performing loans (NPLs) made by the European Commission. Although the Committee suggests an impact assessment for the proposed regulation, it believes that the proposals will contribute to strengthening the EMU and to moving towards the completion of the banking union.
Additional measures at EU level are needed to reduce the volume of NPLs and prevent such loans from accumulating. It is also vital to remove impaired debts from financial institutions' balance sheets so as to avoid the consequences of over-indebtedness in the future and to enable banks to focus on lending to businesses and citizens. In future, credit institutions should ensure responsible lending.
The EESC opinion on the Commission proposals questions the "one-size-fits-all" approach and the calendar for the provisioning of new NPLs under the proposed statutory prudential backstops. The application of backstops should consider the differences between national civil laws and the length of procedures in civil courts. The proposed calendar could force banks to sell new NPLs quickly – a drawback for the companies concerned.
Assessing the potential impact of the proposed regulation on banks, on the transmission of credit to households, on SMEs and on GDP growth is therefore highly recommended in order to see whether the proposed regulation is suitable and effective.
The Commission's proposals encourage the development of secondary markets for NPLs. The EESC believes that regulators should not encourage the sale of NPLs, because of the risk that NPLs are being sold for a lower price on secondary markets than the value they could reach by means of recovery within banks. (jk)