Forslag til europaparlaments- og rådsdirektiv om kredittjenestefirmaer, kredittkjøpere og gjenvinning av sikkerhet
Proposal for Directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral
Svensk departementsnotat offentliggjort 16.4.2018
BAKGRUNN (fra kommisjonsforslaget, engelsk utgave)
Reasons for and objectives of the proposal
This proposal is an important part of the work to strengthen Europe’s Economic and Monetary Union (EMU). A more integrated financial system will enhance the resilience of the EMU to adverse shocks by facilitating private risk-sharing across borders, while at the same time reducing the need for public risk-sharing. In order to achieve these objectives, the EU must now complete the Banking Union and put in place all building blocks for a Capital Markets Union (CMU). The Commission's Communication of 11 October 2017 sets out a way forward to complete the Banking Union by promoting risk reduction and risk sharing in parallel, as part of the roadmap to strengthen EMU set out by the Commission on 6 December 2017.
Addressing high stocks of non-performing loans (NPLs) and their possible future accumulation is essential to complete Banking Union. This will further reduce risks and enable banks to focus on lending to businesses and citizens. NPLs are loans where the borrower is unable to make the scheduled payments to cover interest or capital reimbursements. When the payments are more than 90 days past due, or the loan is assessed as unlikely to be repaid by the borrower, it is classified as an NPL. The financial crisis and subsequent recessions led to a more widespread inability of borrowers to pay back their loans, as more companies and citizens faced continued payment difficulties or even bankruptcy. This was particularly so in Member States which faced protracted periods of recessions. As a consequence of this, as well as other factors, many banks saw a build-up of NPLs on their books.
High stocks of NPLs can weigh on bank performance through two main channels. First, NPLs generate less income for a bank than performing loans and thus reduce the bank’s profitability, and may cause losses that reduce its capital. In the most severe cases, these effects can put in question the viability of a bank, with potential implications for financial stability. Second, NPLs tie up significant amounts of a bank's resources, both human and financial. This reduces the bank's capacity to lend, including to small and medium-sized enterprises (SMEs).
SMEs are particularly affected by the reduced credit supply, as they rely on bank lending to a much greater extent than larger companies, thereby affecting economic growth and job creation. Bank lending is often overly expensive and bank lending volumes to SMEs have been severely affected by the 2008 financial crisis, which impedes the development and growth of SMEs.
Well-developed secondary markets of NPLs are also one of the building blocks for a well-functioning CMU. One of the main objectives of the Commission's priority of establishing the CMU is to provide new sources of financing for EU businesses, SMEs and high-growth innovative companies in particular. While the CMU project is focused on facilitating access to and diversifying non-bank finance for EU businesses, it also acknowledges the important role played by banks in financing the EU economy. Therefore, one of the CMU work streams aims at enhancing banks' capacity to lend to businesses, including through strengthening their ability to recover value from collateral provided to secure loans.
High levels of NPLs must be addressed by a comprehensive approach. While the primary responsibility for tackling high levels of NPLs remains with banks and Member States, there is also a clear EU dimension to reduce current stocks of NPLs, as well as preventing any excessive build-up of NPLs in the future given the interconnectedness of the EU’s banking system and in particular that of the euro area. In particular, there are important potential spill-over effects from Member States with high NPL levels to the EU economy as a whole, both in terms of economic growth and financial stability.
Reflecting this EU dimension and building on the shared agreement on the need to continue and extend the actions already initiated by the Commission, the Council adopted in July 2017 an "Action Plan To Tackle Non-Performing Loans in Europe". The Action Plan sets out a comprehensive approach that focus on a mix of complementary policy actions in four areas: (i) bank supervision and regulation (ii) reform of restructuring, insolvency and debt recovery frameworks, (iii) developing secondary markets for distressed assets, and (iv) fostering restructuring of the banking system. Actions in these areas are to be taken at national level and at Union level where appropriate. Some measures will have a stronger impact on banks' risk assessment at loan origination, while others will foster swift recognition and better management of NPLs, and further measures will enhance the market value of such NPLs. These measures mutually reinforce each other and would not be sufficiently effective if implemented in isolation.
This proposal, together with the other measures the Commission is putting forward as a comprehensive package for NPLs, as well as the action taken by the Single Supervisory Mechanism (SSM) and the European Banking Authority (EBA) are key parts of this effort. In combining several complementary measures, the Commission helps create the appropriate environment for banks to deal with NPLs on their balance sheets, and to reduce the risk of future NPL accumulation.
Banks will be required to put aside sufficient resources when new loans become non- performing, creating appropriate incentives to address NPLs at an early stage and avoid too large accumulation of NPLs.
If loans become non-performing, more efficient enforcement mechanisms for secured loans will allow banks to address NPLs, subject to appropriate safeguards for debtors. Should NPL stocks nevertheless become too high – as it is currently the case for some banks and some Member States – banks will be able to sell them in efficient, competitive and transparent secondary markets to other operators. Supervisors will guide them in this, based on their existing bank-specific, so-called Pillar 2, powers under the Capital Requirements Regulation (CRR). Where NPLs have become a significant and broad-based problem, Member States can set up national asset management companies or other measures within the framework of current state aid and banks resolution rules.
This proposal will prevent excessive future build-up of NPLs on banks' balance sheets in two ways.
First, the proposal will help banks to better manage NPLs by increasing the efficiency of debt recovery procedures through the availability of a distinct common accelerated extrajudicial collateral enforcement procedure (AECE). In the majority of cases, banks address their NPLs themselves by recovering value through work-out. A large share of the loans that become NPLs are loans secured by collateral. While banks can enforce collateral under national insolvency and debt recovery frameworks, the process can often be slow and unpredictable. In the meantime, NPLs remain on banks' balance sheets, keeping the bank exposed to prolonged uncertainty and tying up its resources. This prevents the bank from focusing on new lending to viable customers. Therefore, the proposal makes available more efficient methods to banks and other authorised entities to issue secured loans to recover their money from secured loans to business borrowers, out of court. This more efficient extra-judicial procedure would be accessible when agreed upon in advance by both lender and borrower, in the loan agreement. It will not be applicable for consumer credits and is designed so as to not affect preventive restructuring or insolvency proceedings and not to change the hierarchy of creditors in insolvency. Restructuring and insolvency proceedings prevail over the accelerated extrajudicial collateral enforcement procedure set out with this proposal.
Second, the proposal will encourage the development of secondary markets for NPLs. Under some circumstances, banks may be unable to manage their NPLs in an effective or efficient manner. Banks will in these cases recover less value from their loans than would otherwise be possible. This situation may occur, for example, when banks face a large build-up of NPLs and lack the staff or expertise to properly service their NPLs. Banks may also struggle to manage a portfolio of NPLs where the nature of the loans falls outside of the bank's core expertise to recover. In these if, the best option may be to either outsource the servicing of these loans to a specialised credit servicer or sell the credit agreement to a purchaser that has the necessary risk appetite and expertise to manage it. For these reasons, this proposal removes undue impediments to credit servicing by third parties and to the transfer of credits in order to further develop secondary markets for NPLs. The current diverse legislative framework for NPLs in the Member States has hindered the emergence of an effective secondary market for NPLs. The proposal creates a common set of rules that third party credit servicers need to abide by in order to operate within the Union. The proposal sets common standards to ensure their proper conduct and supervision across the Union, while allowing greater competition among servicers in harmonising the market access across Member States. This will lower the cost of entry for potential loan purchasers by increasing the accessibility and reducing the costs of credit servicing. More purchasers on the market should, everything else being equal, ease the way for a more competitive market with a larger number of buyers, leading to higher demand and higher transaction prices.
This proposal is complementary to a number of other measures presented today as set out in the Commission Communication "Second Progress report on the reduction in Non-Performing Loans in Europe". In order to prevent the risk of under-provisioning of future NPLs, the Commission also issues a separate proposal as regards deductions in relation to insufficient provisioning for non-performing exposures that amends the Capital Requirements Regulation (CRR). The amendment introduces so-called statutory prudential backstops that amount to minimum levels of provisions and deductions from own funds that banks will be required to make in order to cover incurred and expected losses on newly originated loans that later turn non-performing. As further part of the NPL package, Member States are also provided with non-binding guidance on how they can set up, where appropriate, national asset management companies (AMCs) in full compliance with EU banking and State aid rules. The AMC Blueprint provides practical recommendations for the design and set-up of AMCs at the national level, building on best practices from past experiences in Member States.
These initiatives mutually reinforce each other. The statutory prudential backstops ensure that credit losses on future NPLs are sufficiently covered, making their resolution or sale easier. The AMC blueprint assists Member States that so wish in the restructuring of their banks by means of the establishment of asset management companies dealing with NPLs. These effects are complemented by the push to further develop secondary markets for NPLs as these would make demand for NPLs more competitive and raise their market value. Furthermore, accelerated collateral enforcement as a swift mechanism for recovery of collateral value reduces the costs for resolving NPLs. At the same time, the proposal does not affect the numerous safeguards for borrowers available under EU and national legislation. It introduces a number of additional safeguards, in order to limit potential risks from the sale of consumer loans and performing credits.