ahe Brussels – Negotiators from the European Parliament and EU member states have agreed on legal requirements for the resale of loans at risk of default. The new rules for the so-called secondary markets should make it easier for banks to sell non-performing loans (NPL). At the same time, strong protection was agreed for the borrowers affected, who should not have any disadvantages by passing on their loan agreements.
EU Financial Market Commissioner Mairead McGuinness said she was convinced that the new rules will increase market transparency. They also help ensure that the current corona crisis and the potential increase in non-performing loans do not affect financial stability in the EU.
In the past few years there had been a gradual and significant reduction in NPLs in the EU (see graphic). However, not only the EU Commission expects this trend to be stopped at the latest when a wave of bankruptcies among companies should occur after the expiry of the corona support measures.
However, the framework for secondary markets that has now been agreed is only part of a package of NPL measures that the EU Commission presented a good three years ago. Negotiations will continue on the remaining parts. In the meantime, the Brussels authority has also increased it again and, among other things, announced further simplifications for an NPL sale in December. This is to be done, for example, via new securitization rules for so-called non-performing exposures (NPEs) of banks. Other new proposals by the Commission are aimed at improving the quality and comparability of data on loans at risk of default, which should also ensure more market transparency. The technical details of the political agreement that has now been reached have yet to be worked out.
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