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UID:MEC-f4dd765c12f2ef67f98f3558c282a9cd@events.aforeconsulting.eu
DTSTART:20201001T083000Z
DTEND:20201001T093000Z
DTSTAMP:20200824T055500Z
CREATED:20200824
LAST-MODIFIED:20200929
SUMMARY:NPLs & Bank Crisis Framework: Learning from COVID-19
DESCRIPTION:Following the Global Financial Crisis, the EU significantly upgraded the regulatory regime for EU banks. This included legislation to strengthen banks’ capital and liquidity and a number of reforms aimed at addressing the “too big to fail” issue, ensuring that large and complex banking organisations can be resolved without deploying taxpayers’ money. The Bank Recovery and Resolution Directive (BRRD) introduced a resolution regime, recovery and resolution plans, requirements on bail-in and loss absorbing capacity. Although not perfect and not quite complete in places, the regulatory landscape that the EU has in place is now significantly stronger enabling EU policymakers, regulators and the banks in a much better place to withstand times of economic stress.\nWhereas significant progress has been made by the EU on upgrading the regulatory regime post financial crisis, less progress has been made by many banks’ repairing their balance sheets. Banks capital positions have strengthened but asset quality – non-performing loans (NPLs) and forbearance – drove deteriorations in loan portfolio’s. There has been pressure on banks to contain cost, deleverage and restructure whilst the level of profitability of many European banks is low. The average return on equity for all EU banks is around 3 percent, well below their cost of capital.\nLow profitability in banking has real economic consequences. It restricts the extent to which banks can fund growth from retained earnings; it makes raising new equity and debt more difficult and more expensive; it constrains the options available to banks in implementing their recovery plans; and raises questions about their viability and sustainability.  Most importantly, low profitability weakens the ability and willingness of banks to finance the European economy. The EU has been suffering from such a downward spiral since the financial crisis, as evidenced by subdued bank lending, weak or negative economic growth, and high levels of NPLs.\nThe COVID-19 pandemic is having an unprecedented impact on the European economy. Banks weathered the initial fall-out well but as problems shift from liquidity to solvency and the temporary Government credit provision support programmes get closer to ending it is inevitable that NPLs will rise further, especially for those banks with high exposures to the most vulnerable sectors of the economy.\nOver the past few months the European Commission, and also the ECB have been hinting that they are looking to get ahead of the pending problems and revise the EU bank crisis management framework and develop a comprehensive policy to address NPLs’. Planning for the worst, but hoping for the best, makes perfect sense and the expectation is that the Commission will come forward with proposals before the end of 2020.\nThis event looks at what is needed to minimise the pending fallout from COVID-19. Is it simply an issue of tweaking the BRRD to simply the process for precautionary recapitalisations and liquidity support? Do Early Intervention Measures also need to be revisited? To address the problem of NPLs is it an issue of reaching political agreement on the two parts of the Draft Directive on credit services, credit purchasers and the recovery of collateral, or does Europe need an EU-wide Asset Management? Do bank insolvency laws and debt enforcement rules need to be harmonised across Member States?\nAll of these issues are highly political, potentially crucial to the recovery of the EU economy and provide for fruitful discussion for this event with the European Commission as well as representatives from the private sector.\n \n
URL:https://events.aforeconsulting.eu/events/npls-bank-crisis-framework-leaning-from-covid-19/
ORGANIZER;CN=Daniel Trinder:MAILTO:Daniel.Trinder@aforeconsulting.eu
CATEGORIES:In discussion with webinar
ATTACH;FMTTYPE=image/jpeg:https://events.aforeconsulting.eu/wp-content/uploads/2020/09/iStock-1213090148.jpg
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