Non-performing loans (NPLs) are still an important problem in Europe, in particular in the euro area. Provisioning is one way to address such a problem. Although coverage ratios have been increasing in recent years, banks’ provisioning policies are quite different across banks and countries. Various reasons, ranging from different collateral characteristics and enforcement systems to tax regimes, accounting methods, managerial and supervisory practises, contribute to explain the observed differences. Recent measures aimed at increasing transparency and disclosure rules and the adoption of new accounting rules are an important step forward. They have to be complemented, however, by appropriate early intervention measures and effective supervisory power.

Provisioning policies for non-performing loans: how to best ensure a “clean balance sheet”?

Elena Carletti;Brunella Bruno
2017

Abstract

Non-performing loans (NPLs) are still an important problem in Europe, in particular in the euro area. Provisioning is one way to address such a problem. Although coverage ratios have been increasing in recent years, banks’ provisioning policies are quite different across banks and countries. Various reasons, ranging from different collateral characteristics and enforcement systems to tax regimes, accounting methods, managerial and supervisory practises, contribute to explain the observed differences. Recent measures aimed at increasing transparency and disclosure rules and the adoption of new accounting rules are an important step forward. They have to be complemented, however, by appropriate early intervention measures and effective supervisory power.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/4019714
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