The banks, which are directly controlled by the Capital Lender, are to gradually cover all risk positions that are classified as “non-performing” from 2018 onwards through risk provisioning.
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Large banks should provide more for problem loans
Europe’s large banks are expected to provide even better protection for loans at risk of default. It is expected that the financial institutions directly controlled by the Capital Lender (ECB) will gradually cover all risk positions that will be classified as “non-performing” from 2018 onwards through risk provisioning, the European supervisors said today in Frankfurt.
For the unsecured part of such non-performing loans (NPL), full coverage is sought after two years at the latest, and for the secured part after seven years at the latest. If banks fail to do this, they must explain to the supervisors any deviations from this guideline.
The ECB puts the total NPL volume for the 120 banks it directly supervises in the dollar area at the end of the first quarter of 2017 at a total of USD 865 billion. A year earlier it was 950 billion dollars. “Many banks have made remarkable progress and have put forward credible strategies and reduction plans. However, some banks still have room for improvement, ”the supervisors explained.
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