Targeted consultation on statutory prudential backstops addressing insufficient provisioning for newly originated loans that turn non-performing

The Commission services launch this targeted consultation to gather stakeholders’ views on the possible introduction of statutory prudential backstops against insufficient loan loss coverage for new loans that turn non-performing, as well as on the potential functioning, scope, design and calibration of such prudential backstops.

Reason why the consultation period is less than 12 weeks

The work on the possible introduction of statutory prudential backstops, most notably the report the Commission Services are preparing, is part of a comprehensive package of measures to address NPLs. As announced in its Communication on completing the Banking Union, and as a follow-up to the July 2017 Conclusions of the Council on tackling NPLs in Europe, the Commission will adopt this package by Spring 2018. In order to complete the report on statutory prudential backstops, accompanied if appropriate with the necessary legislative proposals, within this timeframe, the Commission Services would need to receive stakeholders’ views by the end of November 2017. In addition, the Commission Services are reaching out to stakeholders and experts from both the private and the public sector in a targeted way.

Related links

• Press release
• Previous consultation on the development of secondary markets for non-performing loans and distressed assets and protection of secured creditors from borrowers’ default