Supervisory managers meet market players at the Non-Performing bank loan conference at the Universita’ Cattolica
The conference, “Non-performing loans, between supervisory policies and the market”, supported by the Università Cattolica alongside thecreditriskclub.it community and CRIF was set up to compare the positions of these different players, facilitating a technical discussion to support the search for solutions and tools to overcome emergencies.
The economic crisis has left the Italian financial system with a legacy of a significant deterioration in credit quality and an unprecedented percentage of non-performing loans (NPL). Since 2008, the amount of deteriorated exposures has essentially quadrupled, while the ratio between gross NPLs and bank loans (roughly equal to GDP) has more than quadrupled, now standing at more than 10%.
Given the systemic impacts of the problem, it is natural that the Supervisory Authority and the Government are actively looking at this issue. On the one hand, they are urging banks to organize themselves to manage the issue and strengthen Data Quality for the monitoring and management of NPLs, and on the other hand they are encouraging the selling off of NPLs and acceleration of collection process.
For example, the ECB has recently drawn up the “Guidance to Banks” on NPL management, clarifying Banking Supervision expectations for the future. The Bank of Italy has joined the field to explain to international observers the specific features of the Italian context, while the Italian Banking Association (ABI) has asked for greater fairness between banks in different countries. The EBA (European Banking Authority) has put forward guidelines and standards to reach uniform definitions of “bad debts” and “non-performing exposures” which are valid across the whole European Union.
Despite some difficulties, the NPL transaction market has proved to be lively, and has seen the active involvement of specialist investors, banks and special servicing companies.
Go to The Credit Risk Club for more information.