NPLs in emerging Europe under microscope on new site

Platform will provide a constantly updated resource of information on faltering loans in CESEE countries

A living web archive of information on non-performing loans (NPLs) in Europe’s emerging economies has been launched by the European Bank for Reconstruction and Development (EBRD).

Unveiled on 1 September, the NPL Initiative aims to harvest as much policy data and finance-industry research as possible about ill-starred loans in the economies of Central, Eastern and Southeastern Europe (CESEE).

According to the EBRD, that sub-region holds some of the “highest and most persistent” levels of Europe’s €1.1 trillion NPL stocks.

The EBRD says that, as CESEE countries are important hosts to key, foreign banks headquartered mainly in Western Europe, enhancing NPL resolutions and transactions in the region remains a major priority for European stakeholders.

With that in mind, the new website will contain a regional chart of NPL vulnerabilities, data on debt transactions, a twice-yearly Regional NPL Monitor and details on progress made with debt restructures and reforms in 11 different countries.

It will also feature notes on best practices, and related training resources.

The NPL Initiative has been set up as a specialist branch of the Vienna Initiative: a framework launched in early 2009 – at the height of the global financial crisis – designed to safeguard Europe’s financial stability.

With its particular focus in mind, the NPL Initiative aims to:

• Enhance the transparency and effectiveness of NPL resolution frameworks via the new site, together with in-country workshops and in-depth analysis of national impediments to sound NPL restructuring and sales;
• Facilitate sharing of knowledge through the site as an industry ‘knowledge hub’ that will help to distribute expert publications on relevant topics;
• Provide technical assistance and other capacity-building support, coordinated between relevant international organisations and EU bodies; and
• Facilitate training in modern restructuring principles to improve understanding among private market participants in the CESEE economies.

The EBRD explained that while CESEE economies “have gained much experience in the area of NPL resolution and debt restructuring in recent years, greater transparency and the implementation of robust NPL reform agendas are still a priority”.

It added: “National laws, regulations, infrastructures and frameworks need to support and promote efficient restructuring and resolution of distressed exposures, and allow fully functioning markets for the sale of NPLs.”

Bojan Markovic – EBRD deputy director of economics, policy and governance – said: “Resolving the NPL issue remains a critical task for the recovery of the banking sector. It is a precondition for the resumption of stronger, yet sound, lending, which would fuel more vibrant growth.

“This new website makes an important contribution by providing transparent and accessible information to the public and professional stakeholders.”

Visit the NPL Initiative website here.