Sven Giegold
Mitglied der Grünen/EFA-Fraktion im Europaparlament

Sprecher Europagruppe Grüne

Non-performing loans: Completion of the Banking Union necessitates real risk reduction and risk sharing

Today, the draft report on a prudential backstop for the provisioning of non-performing loans (NPLs) will be discussed in the Economic and Monetary Affairs Committee (ECON). The Co-Rapporteurs in the European Parliament Esther De Lange (EPP) and Roberto Gualtieri (S&D) have put forward amendments weakening the already lax Commission proposal for a NPL Regulation. All political groups will have time until end of this week to table their amendments upon which compromises have to be reached. After this parliamentary pre-work, the negotiations with the Council on the final legislative text can start. So far, neither the Co-Rapporteurs in the European Parliament nor the Council have finalized their work on the Commission proposal for a Directive on credit servicers, credit purchasers and the recovery of collateral.

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group and Green Shadow Rapporteur on the NPL Regulation, and MEP Ernest Urtasun, Green Shadow Rapporteur on the NPL Directive, commented:

“The whole discussion about provisions for bad loans in Europe is totally screwed. The US regulatory and accounting framework requires banks to write down non-performing loans within six months. The options that are currently on the table would give European banks up to nine years to fully provision their NPLs. This is not a prudent approach and does not lead to the risk reduction we need to achieve in European banks’ balance sheets.

We all know that the lack of progress towards risk reduction will be used by some governments and political families to block the much needed European Deposit Insurance Mechanism (that offers the same protection for savers everywhere in Europe) and the fiscal backstop for the ESM. Therefore, the ones asking for weak rules on NPLs are in fact preventing the Banking Union from getting completed by a third pillar. Getting to a stronger framework for the Euro means to adopt a tough line on the prudential backstop for NPLs. We urgently need both risk sharing and risk reduction, and this deal of the grand coalition on NPL will block both.

The experience in the US has shown that banks can cope with tough rules. Therefore, we as Greens have a strong preference for being strict when it comes to the prudential backstop for bad loans. Besides the NPL Regulation, we also urgently need minimum standards for credit servicers. We won’t accept that people are driven off their homes or loosing their small businesses by unregulated credit servicers like Cerberus, Anticipa, Blackstone or Intesa Sanpaolo purchasing bad loans from regulated credit institutions. In order to better protect consumers in Europe, we should move forward with the NPL Directive.”

Overview of the different approaches on a timetable for NPL provisions:

https://sven-giegold.de/wp-content/uploads/2018/11/Timetable-for-the-provisioning-of-NPLs.pdf

Draft report of the European Parliament on a Regulation on a prudential backstop for the provisioning of non-performing loans:

https://sven-giegold.de/wp-content/uploads/2018/11/EP-Draft-Report-NPL-Regulation.pdf

Commission proposal for a Regulation on a prudential backstop for the provisioning of non-performing loans:

https://sven-giegold.de/wp-content/uploads/2018/11/COM-Proposal-Regulation.pdf

Commission proposal for a Directive on credit servicers, credit purchasers and the recovery of collateral:

https://sven-giegold.de/wp-content/uploads/2018/11/COM-Proposal-Directive-on-credit-servicers-credit-purchasers-and-the-recovery-of-collateral.pdf