The European Commission’s Strategy for Post COVID-19 NPLs
The European Commission published a communication on 16 December 2020 outlining their EU-wide strategy to address the anticipated rise in NPLs post COVID-19. It focuses on the advantages of tackling NPLs early to avoid a renewed build-up on banks’ balance sheets and aims to ensure that banks can continue to support the economic recovery.
With the COVID-19-induced recession underway, the volume of NPLs is expected to rise on an EU-wide level. Based on key lessons learned from the economic crisis of 2008, (pre-emptive) measures may be needed to prevent NPLs accumulating on banks’ balance sheets. This should help preventing slowed down bank lending. Besides Member States support schemes and, inter alia, the European Banking Authority (EBA) reactivating its Guidelines on legislative and non-legislative moratoria, ECOM has adopted a strategy to address NPLs in the aftermath of the COVID-19 pandemic. ECOM’s NPL strategy builds upon a set of measures, previously implemented in the context of ECOFIN’s NPL action plan of 2017 and is centred around four main goals:
The strategy combines measures at Member State level with a Pan-European effort. ECOM’s proposed structural changes on a Pan-European level include enhanced transparency and comparability of NPL data, all while debtor protection is upheld. The success of both national and European measures will, however, ultimately depend on a range of legal acts harmonising insolvency and enforcement frameworks across the Member States.
Here you can find the text about ECOM strategy.
The European Commission again prolongs and expands the COVID-19 State aid Temporary Framework
At the beginning of the COVID-19 crisis, on 19 March 2020, the European Commission adopted a State aid Temporary Framework to support the economy and to avoid as much as possible the negative economic consequences of the health crisis. Since then, the Temporary Framework was amended on 4 April 2020, on 8 May, on 29 June 2020 and on 13 October 2020. Since its adoption, numerous national State aid measures have been approved by the European Commission on almost a daily basis.
One year after the start of the spread of COVID-19 in Europe, the European Commission has adopted on the 28 January 2021 the 5th amendment of the Temporary Framework. A consolidated version of the Temporary Framework can be found here.
The amendment prolongs all measures of the Temporary Framework (including the temporary removal of all countries from the list of “marketable risk countries”) until 31 December 2021.
For further information on this topic please click here.
Source: ec.europa.eu