European banks will have 9 years to provision their new ‘toxic assets’

European banks will have 9 years to adapt to the new capital requirements from the European Union related to the level of distressed debt in their balance sheets. That’s what the Twenty Eight settled last Wednesday, two days before the results of the stress tests from the ECB show how healthy are European banks.
The governments of the EU have set their position in anticipation to the talks that will begin with representatives from the European Parliament to approve the regulation, once the euro MPs agree on their “red lines”.
Specifically, the proposal demands banks a given level of provision, according to the level of distressed debt. The new levels of coverage impact only the new non-performing loans and not the ones already in the balance sheets of the entities. The level of these provisions depend, as well, on the class of these toxic assets.
The deadline to reach the total provision will be extended up to nine years in the case of the distressed debt with less risk, those secured by properties. Specifically, they demand coverage of these assets to be set on 25.5% three years after the ‘distressed’ classification. This percentage will increase progressively until reaching 100% at the ninth year, says Europa Press.

One more year than expected

The negotiating position of the UE governments gives, thus, one more year to the financial entities for fully provisioning all their new non-performing loans, compared to the European Commission’s proposal, that established eight years to provision secured debt.
The Twenty Eight, however, are reducing to seven the deadline of the banks to provision at 100% those defaulted loans secured by movable collaterals.
Lastly, the coverage level is tightened for those distressed assets without collaterals, that will have to be provisioned at 35% two years after being classified as such and 100% a year later.
“To handle the toxic assets and consolidate the banks’ balance sheets is essential to return the trust in our financial system. This requires solid prudential rules and effective supervision tools”, said Hartwig Löger, Austrian Finance Minister, that holds the Turn Presidency of the UE until the end of the year.

Source: OK Diario.

Comments are closed.

COOKIE POLICY

What are cookies

Cookies are small files that contain certain information about the user's browsing through the web page. Cookies are sent to the user's browser and stored on your computer.

Purpose of cookies

Cookies are used to capture information about the user's browsing, by analyzing it, to find out how the user interacts with www.copernicusservicing.com, and thus optimize the experience of browsing.

Types of cookies The cookies we use are:

- Analysis Cookies (Google analytics): they allow the monitoring and analysis of the user's behavior in order to introduce improvements according to the user's use of the web page and the services. According to Google, Google Analytics is a free web analytics tool that mainly allows website owners to know how users interact with their website. It also enables cookies in the domain of the site where you are and uses a set of cookies called "__ utma " and "__ UTMZ " To collect information anonymously and to produce web site trend reports without identifying individual users. Learn more about Google analytics at:

https://developers.google.com/analytics/devguides/collection/analyticsjs/cookie-usage

-Technical cookies: Allow the user to navigate through the website and use their different options or services.

Disabling cookies

Users can reject the possibility of us using cookies on their terminal computer by configuring their browser, but this will lead to a less satisfying browsing experience that can even be flawed. For more information on deactivating cookies visit:

https://support.mozilla.org/es/kb/Borrar%20cookies

https://support.google.com/chrome/answer/95647?hl=es

http://windows.microsoft.com/es-xl/internet-explorer/delete-manage-cookies#ie=ie-11-win-7

http://support.apple.com/kb/ht1677?viewlocale=es_ES