A Strategy for Resolving Europe's Problem Loans

Shekhar Aiyar, Wolfgang Bergthaler, Jose Garrido, Anna Ilyina, Andreas Jobst (), Kenneth Kang, Dmitriy Kovtun, Yan Liu, Dermot Monaghan and Marina Moretti

No 2015/019, IMF Staff Discussion Notes from International Monetary Fund

Abstract: Europe’s banking system is weighed down by high levels of non-performing loans (NPLs), which are holding down credit growth and economic activity. This discussion note uses a new survey of European country authorities and banks to examine the structural obstacles that discourage banks from addressing their problem loans. A three pillared strategy is advocated to remedy the situation, comprising: (i) tightened supervisory policies, (ii) insolvency reforms, and (iii) the development of distressed debt markets.

Keywords: SDN; book value; unsecured debt; expected return; profit sharing; NPL ratio; NPL resolution; bank capitalization; area bank; real GDP; bank profitability; capital buffer; Nonperforming loans; Distressed assets; Loans; Solvency; Debt restructuring; Europe; Global (search for similar items in EconPapers)
Pages: 79
Date: 2015-09-24
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Citations: View citations in EconPapers (28)

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