Non-performing loans package

Key points

The EESC:

• welcomes the Commission's package that is the centrepiece in the EU offensive to address the persisting issue of NPLs and fundamental to progress towards the Banking Union;

• draws attention to the social consequences of the financial crisis in terms of exclusion, social justice and obstacles to the completion of the internal market;

• calls for responsible lending by credit institutions;

• agrees with the application of statutory prudential backstops as a preventive measure to ensure that credit losses on future NPLs are sufficiently provisioned;

• points out however that a "one size fits all" approach does not take into account the differences that still exist national civil laws and the length of procedures in civil courts and;

• highlights that the calendar for the provisioning of new NPLs may force the banks to sell them quickly;

• calls on the Commission to consider the specific situation of smaller and specialised firms with a less complex asset structure;

• calls for a specific impact analysis aimed at estimating the potential impact of the proposed regulation on banks, on the transmission of credit to households, on SMEs and on GDP growth;

• considers that IFRS 9 should be mandatory for all EU banks to further mitigate the differences in provisioning stemming from the different accounting frameworks;

• recognises that the Commission gives an answer to many of the problems of fragmented NPLs secondary markets in the EU, however;

• is of the view that regulators must not encourage the sale of NLPs;

• underlines the importance of consumer protection and workers protection consideration in relation to the consequences of credit transfers;

• welcomes that the right to a fair trial in a national court is ensured if it is necessary and if the application of this procedure as proposed in the directive is restricted;

• notes that while the out-of-court procedures may be beneficial for the creditor, the solution to the problem of NPLs lies mainly in strengthening judicial procedures across the whole EU.