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Non-performing loans package

EESC opinion: 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.