European Parliament Plenary on non-performing loans (NPL)

14 March 2019

On 13 March 2019, the European Parliament voted in plenary a compromise with the Council of the EU on capital measures for banks with bad loans (watch the debate here). MEPs in Strasbourg voted 426 to 151, with 26 abstentions, to require a “prudential backstop” for banks to write off soured debts against their capital and set up a regulatory calendar for provisioning requirements, which gives banks years to carry out the write-downs depending on the nature of the collateral (secured/unsecured; Immovable/movable).

The Council and MEPs decided to press ahead with the provisioning backstop to get agreement on at least one part of the package before the Parliament dissolves ahead of May’s European elections. Prioritizing the backstop, however, meant that Brussels lawmakers left behind proposals to speed up recovery of collateral and promote a secondary market for banks to sell NPLs. As mentioned in an email sent on Monday 11 March; lawmakers are now pushing for a deal on the secondary-market measures before the legislative term ends.