EU states reach deal to ease banks' bad loan recovery

This post was originally published on this site

BRUSSELS (Reuters) – European Union governments reached a deal on Wednesday on new rules to facilitate banks’ recovery of assets from borrowers who default, an EU statement said.

The new rules, which need to be backed by the European Parliament, would introduce a mechanism to favor out-of-court procedures on foreclosures, speeding up banks’ recovery of collateral used by borrowers to obtain loans when they fall behind on their repayment schedule.

The EU’s stock of non-performing loans is at its lowest since the financial crisis but remains high in some countries, including Greece, Cyprus, Portugal and Italy, tying up capital and making it more difficult for banks to lend to firms and households.

The mechanism, envisaged only for business loans and not consumer loans, is expected to reduce the losses banks incur when lenders offload non-performing loans. It would, however, increase the burden on borrowers.

The rules would apply to new loans and would have to be agreed between a bank and a borrower upfront, normally when the loan is granted.

“It is important to give legal tools to banks to recover the value of failing loans quickly without having to go to court, while ensuring a high level of protection for borrowers,” Finland’s finance minister Mika Lintila said in a statement.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment