The European Commission is working on a communication on non-performing exposures, which will be ready by the end of the year. This was said yesterday by the EU Commissioner for Economy, Paolo Gentiloni, during his hearing on the Tax Policy of the EU Commission to the EU Finance and Policies commissions of the Italian Chamber of Representatives (see Radiocor here).
“We cannot exclude at all that there are crises and difficulties for businesses. And that this translates into the risk, in the medium term, of increasing the number of impaired loans for banks. I’m not speaking of just Italian banks, I’m speaking in general “, Mr. Gentiloni said, adding that “banks facing this crisis in a much better condition than in the previous crisi. The balance sheets have been restored and then, in recent months, moratorium measures have been adopted that have encouraged the possibility of dealing with these risks “. Having said that, “since we cannot exclude that the situation will produce some consequences, despite the strength of our European and Italian banking system being much greater than in the previous crisis, we are still working on a communication that we will presented by the end of the year and which will focus on two aspects: regulatory frameworks on insolvency and debt collection, ensuring an adequate balance between credit and debit interest, and further development of the secondary market for non-performing exposures”.
We remind you that new European rules in particular are expected shortly to simplify the securitisations of impaired loans (see here a previous article by BeBeez). Last July, in fact, the European Commission published a Proposal for a Regulation of the EU Parliament and of the Council amending Regulation (EU) 2017/2402 which establishes a general framework for securitization and establishes a specific framework for simple, transparent and standardized securitizations to support the recovery from the Covid-19 pandemic and a Proposal for a Regulation of the EU Parliament and of the Council amending Regulation (EU) no. 575/2013 regarding adjustments to the securitization framework to support the economic recovery from the Covid-19 pandemic.
The Commission’s starting point is that “it is essential that banks can keep on lending to businesses in the coming months, once the immediate shock of the COVID-19 crisis has passed. It is therefore important to prepare or improve all the tools that allow banks to maintain, or even strengthen, their ability to lend to the real economy and in particular to SMEs. Securitizations can play a decisive role in this regard as, by transforming loans into negotiable securities, they could free up bank capital for the disbursement of further loans and allow a wider range of investors to finance the economic recovery “.