CYPRUS: ECB calls on banks with high NPEs to submit strategic plans

The European Central Bank has called on European banks with high NPEs to submit documents describing their strategy to bring down their non-performing loans.

According to the ECB, each bank is entitled to make use of any tools at their disposal to bring down their exposure to NPLs.

An annual ECB report on Supervised Activities for 2018, reports that banks registered in Greece, Cyprus and Portugal recorded the highest NPE, with rates of 43.4%, 20.7% and 14.5% respectively, in the third quarter of 2018.

According to the report, the Cyprus banks NPL ratio declined significantly on an annual basis by 13.3%, Slovenia’s banks by 5.3%, Irish banks by 3.7%, Portuguese banks by 3.6%, and banks in Greece reduced their NPE by 3.2%.

In Q3 2018, Italy’s banks had the largest non-performing loan portfolio worth EUR 153 bln, followed by French banks with a EUR130 bln portfolio, while Spanish banks had a portfolio worth EUR 95 bln and Greek credit institutions had EUR 90 bln worth of non-performing exposure.

The ECB has developed a supervisory framework for non-performing loans, which includes three strategic elements, which are either directly addressed to old-style non-performing loans or are intended to prevent the creation of new non-performing loans in the future.