The new European regulation on non-performing loans. Risks and opportunities for banks

The problem of bad loans invests multiple aspects: from the identification of the causes of the phenomenology under examination, to the identification of suitable strategies to facilitate a prompt reduction of NPLs. The changes that have recently affected (both in Europe and in Italy) the regulation and supervision of the management of the NPLs, some of which are still being finalized, if appropriately “calibrated”, are likely to have a profound effect on the recovery techniques of these credits. However, the new prudential rules base the disposal of problematic assets on a questionable automatism that subjects banks to the risks of an excessive immobilization of assets and underestimates the differences present in national jurisdictions as well as the different ability to manage them at company level. On the market solutions side, there is an increase in securitization and related significant risk transfer operations. Important regulatory changes are aimed to promoting the development of a pan-European secondary market for NPLs and facilitating the enforcement of out-of-court guarantees. The reflections that we intend to develop in this intervention focus on the main implications that the recent developments of the regulatory framework are able to determine for the activity of the banks, called to adopt organizational arrangements specifically aimed to favoring such processes of disposal and rethinking in depth your business model. Implications that credit intermediaries will necessarily have to take into account to ensure that their support to the economy can remain high even in the new, more difficult regulatory and market environment.