Our comments on the European Commission Roundtable on NPL on the 25th September 2020.
Comments on European Commission Roundtable on NPL
By Burkhard Heppe
Published Wednesday 30 September, 2020
We summarize our key takeaways from the roundtable on non-performing loans (NPL) organised by the Commission. We comment on the significant progress on NPL to date and some key future developments with a focus on data standards, transparency and transaction platforms. We participated in this important roundtable with a number of questions in mind and received the following answers or impressions:
- Are there immediate plans for a central bad bank for legacy or Covid-19 related NPL sponsored by the ECB as reported in the press during the summer? No, there was no indication for this. The Commission focused on guidelines for new national asset management companies (AMC) including establishing a network of national AMC which may benefit from cross-border synergies and a central data hub.
- Are there plans for an EU-wide Amazon-style transaction platform sponsored by the ECB as reported in the press recently? No, the ECB rejected the notion outright, but continues to support the idea of transactions platforms to overcome market failures.
- Will the use of the EBA data template for NPL transactions become mandatory for sellers? Possibly, but not imminent. The issue of data standardisation remains a high priority item and the proposed Secondary Market Directive includes a mandate for EBA to develop the data template into technical standards. However, for now the use of the data template is not mandatory.
- Will the use of NPL transaction platforms like NPL Markets become mandatory? Possibly, but not imminent. Transaction platforms are seen as an important tool to increase market transparency and efficiency, but the use of transaction platforms will remain at the discretion of the seller for now.