EBA consultation on how to manage non-performing exposures

The European Banking Authority (EBA) has issued a consultation on its draft guidelines for credit institutions on how to effectively manage non-performing exposures (NPEs) and forborne exposures (FBEs). The guidelines are designed primarily to reduce NPEs on banks’ balance sheets by providing supervisory guidance to ensure that credit institutions effectively manage NPEs and FBEs in their balance sheets. The guidelines are written from a prudential perspective, but are also mindful of the need to ensure that consumers, who have taken out loans, are treated fairly at every stage of the loan life cycle. To that end, the guidelines draw attention specifically to provisions under the EU Directives and relevant EBA guidelines relating to consumers, that credit institutions need to be cognisant of when managing NPEs. The development and operationalisation of an NPE strategy is the core building block of the guidelines for banks’ NPE management. The guidelines outline the…

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