The Austrian Financial Market Authority (FMA) welcomes and supports the initiative of the European banking supervision authorities in addressing the Europe-wide issue of non-performing loans (NPLs). The European Banking Authority (EBA) today published uniform Europe-wide standardised reporting templates for NPLs, thereby creating a basis to allow potential investors to quickly review and assess non-performing loans. Furthermore, the Single Supervisory Mechanism (SSM), the single banking supervision authority for Euro area countries, located at the ECB, has also published a common standard for the management of non-performing loans in its “ECB Guidance to banks on non-performing loans”, that is due enter into force soon, and which in particular also addresses newly emerging NPLs. The EBA is current working on extending this SSM Guideline on NPL Management during the course of 2018 so that it will then apply to all banks within the European Union.
“It is high time that the issue of non-performing loans is also tackled on a Europe-wide basis,” remarked the FMA’s Executive Directors Helmut Ettl and Klaus Kumpfmüller. This legacy of the past continues to paralyse the financial economy and is proving to be a drag on economic upturn in Europe.
As at mid-2017, the total volume of outstanding non-performing loans at all banks within the European Union stood at € 893 billion, with the NPL ratio standing at 4.5%, although there are 8 EU Member States with an NPL ratio of more than 10%. EU Member States as a whole were able on average to only reduce their NPL ratio by one-third since 2014 from 6.9%, while Austria was able to almost half its NPL ratio from 8.0% to 4.3% during the same period, although this figure also takes into account the higher level of NPL exposures of banking subsidiaries in Central Eastern and South Eastern Europe (CESEE), that are far higher in comparison with Austria’s domestic banking market. The massive reduction in NPL exposures has in particularly been successful in that Austrian banks have established powerful workout units, and have also been able to sell packets of non-performing loans of a wide range of sizes to professional investors.
The harmonisation of standards in Europe for the reporting of, management and liquidation of non-performing loans facilitates the analyse, valuation and pricing of NPL portfolios, thereby also playing a considerable contribution to the further building up and strengthening of the secondary marks for adjusting the NPL portfolios of banks.
The EBA Press Release about its NPL templates can be found on the EBA website at: https://www.eba.europa.eu/, while the templates and accompanying documents may be found at: https://www.eba.europa.eu/risk-analysis-and-data/eba-work-on-npls.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-6006
+43/(0)676 88 249 516