The State-of-the-Art of NPLs in the Post COVID World: An Ongoing Concern for the Future

Mariateresa Maggiolino, R. Morgan, Maria Lucia Passador
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Abstract

The purpose of this article is to examine the current situation of non-performing loans (NPLs) in the EU from a diachronic perspective, with a special focus on the regulatory and factual events relating to the Covid-19 pandemic. Although we agree with Cicero that "Historia vero testis temporum, lux veritatis, vita memoriae, magistra vitae, nuntia vetustatis", our reflections on the status of NPLs in Europe are necessarily more nuanced. History can serve as a powerful guide, but the greatest disruptive scenarios require a conscious and consistent adjustment by people and regulations. Specifically, they must seek to cope with unforeseen developments that differ from those faced in the past, requiring continued awareness and flexibility. To this end, it is necessary to proceed step by step and begin with a thorough review of the rationale and goals of NPL-related measures taken so far. First of all, it is necessary to examine and recall the critical role played by banks in the economy and how they are able to absorb losses up to a certain amount. It is equally important to note that they cannot cope with heavy losses, which often occur in situations where their ability to lend credit and their reputation on the market cannot shield them from the impact of both pathological NPL flows and the inadequacy of their NPL management structures. Meanwhile, it should also be recalled that the cause of the most recent NPL crisis was linked to the sub-prime crisis, which taught us that the hardest risk to foresee is the probability of default even by normally well-paying debtors. The current situation faced by EU Member States is filled with yet more uncertainty, but we are far better prepared now than we were then. The post-Covid era will benefit from the many safeguards which have already been implemented, including: the prohibition of profit distribution by banks recommended by the EBA; greater flexibility in the interpretation of financial statement criteria (IFRS) and the classification of NPLs; and some essential measures to streamline the functioning of the secondary market for selling or restructuring NPLs. Against this background, empirical evidence can show us which direction we are moving in. It shows that we should not to drop our guard, but rather keep a watchful eye on the situation and act promptly and swiftly if/when needed. More precisely, following the NPL regulatory framework developed by the EU and several nations in the mid-2010s, NPL ratios and the aggregate amount of NPLs consistently dropped between 2015 and the first quarter of 2021, with the one exception being the first quarter of 2021 which saw a slight uptick in the aggregate number of NPLs. Moreover, corporate and household debt levels across some of the more traditionally problematic financial markets in the EU remain relatively healthy, at least compared to 2013 levels. However, government debt-to-GDP levels have increased substantially (almost doubled) in 2020 compared to the mid-2000s and are at their highest ever recorded levels across Member States. This may limit Member States’ capacity to intervene in the event of a financial or economic crisis. We do not say this to cause alarm, but rather present it as a warning to keep alertness levels high and interest in the topic alive. It is anything but outdated, and anything but solvable, with the helpful although rather rudimentary tools that history itself has provided.
新冠肺炎后世界的不良贷款状况:对未来的持续关注
本文旨在从历时的角度审视欧盟不良贷款(NPLs)的现状,并特别关注与Covid-19大流行相关的监管和事实事件。虽然我们同意西塞罗的“历史上对时间的检验、真理、生命的记忆、地方的生命、不确定性的生命”,但我们对欧洲不良贷款状况的反思必然更加微妙。历史可以提供有力的指导,但最具破坏性的情景需要人们和监管机构有意识地进行持续的调整。具体地说,它们必须设法应付不同于过去所面临的不可预见的事态发展,这需要持续的认识和灵活性。为此目的,有必要一步一步地进行,并首先彻底审查迄今所采取的与国家化学物质有关的措施的理由和目标。首先,有必要审视和回顾银行在经济中所扮演的关键角色,以及它们如何能够吸收一定数量的损失。同样重要的是要注意,他们无法应对严重的损失,这往往发生在他们的贷款能力和他们在市场上的声誉无法保护他们免受病态不良贷款流动和不良贷款管理结构不足的影响的情况下。与此同时,我们也应该记住,最近的不良贷款危机的起因与次贷危机有关,次贷危机告诉我们,最难预测的风险是违约的可能性,即使是通常支付良好的债务人。欧盟成员国面临的当前形势充满了更多的不确定性,但我们现在比那时准备得更好。后covid时代将受益于已经实施的许多保障措施,包括:EBA建议禁止银行的利润分配;在解释财务报表准则(IFRS)和不良贷款分类方面具有更大的灵活性;以及一些必要措施,以简化二级市场出售或重组不良贷款的功能。在这种背景下,经验证据可以告诉我们正在朝哪个方向前进。这表明我们不应该放松警惕,而应该保持警惕,并在需要时迅速采取行动。更准确地说,根据欧盟和几个国家在2010年代中期制定的不良贷款监管框架,不良贷款率和不良贷款总额在2015年至2021年第一季度之间持续下降,唯一的例外是2021年第一季度,不良贷款总额略有上升。此外,在欧盟一些传统上问题较多的金融市场,企业和家庭债务水平仍然相对健康,至少与2013年的水平相比是如此。然而,与2000年代中期相比,2020年政府债务占gdp的比例大幅增加(几乎翻了一番),并达到了会员国有史以来的最高水平。这可能限制会员国在发生金融或经济危机时进行干预的能力。我们这样说并不是为了引起警觉,而是作为一种警告,让人们保持高度警惕,并对这个话题保持兴趣。它绝不是过时的,绝不是可以用历史本身提供的有用但相当简陋的工具来解决的。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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