ECB publishes guidance to banks on tackling non-performing loans

The European Central Bank (ECB) has published its final guidance on non-performing loans (NPLs).

The publication of the guidance follows a consultation launched in September 2016. The ECB has also published a feedback statement indicating where changes have been made to the guidance following feedback received to the consultation.

The guidance outlines measures, processes and best practices which banks should incorporate when tackling NPLs. Although the guidance is non-binding in nature, it is intended to clarify the supervisory expectations regarding NPL identification, management, measurement and write-offs in areas where existing Regulations, Directives or guidelines lack specificity.

The ECB has called on banks to implement strategies to work towards a holistic approach regarding NPLs.