EBF advisor: Blazej Blasikiewicz
Publication date: 19 September 2017
With regard to the development of the secondary market for NPLs, EBF believes that the most important way is to enhance creditors’ recovery tools, reducing the complexity, time and cost of recovery procedures. Giving investors an efficient and stable recovery framework reduces uncertainty and, consequently, the risk premium incorporated in the price. Prices and depth of secondary markets for NPLs could be significantly higher if these kinds of measures are introduced.
Moreover, EBF and its Members are not certain that measures at the EU level (Directive or Regulation) are the most efficient tools to help reduce the significant levels of NPLs some banks in several member states have on their balance sheet. The implementation of reforms needed to promote the development of secondary markets should aim at the level of the Member States. However, the EU could play an important role in the process of identification of significant obstacles and in ensuring that those EU Member States, which do not have a workable framework for the development of the secondary market for NPLs, implement necessary reforms, if that is considered needed due to the high level of NPLs in those Member States.
With regards to the establishment of a new kind of loan security, labelled “accelerated loan security”, EBF believes that there would be benefits in creating such a form of collateral / security primarily in the case that such s type of collateral remains valid / enforceable in the insolvency / pre-insolvency processes. In case it is not valid / enforceable and insolvency may be opened in a swifter manner at the request of the debtor / third parties, such an “accelerated loan security” becomes a common type of collateral without additional practical use.