Staff Discussion Notes

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Format: Chicago

Shekhar Aiyar, Wolfgang Bergthaler, Jose M Garrido, Anna Ilyina, Andreas Jobst, Kenneth H Kang, Dmitriy Kovtun, Yan Liu, Dermot Monaghan, and Marina Moretti. A Strategy for Resolving Europe's Problem Loans, (USA: International Monetary Fund, 2015) accessed December 3, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

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.

Subject: Asset and liability management, Banking, Debt restructuring, Distressed assets, Financial institutions, Financial sector policy and analysis, Loans, Nonperforming loans, Solvency

Keywords: Area bank, Bank capitalization, Bank profitability, Book value, Capital buffer, Debt restructuring, Distressed assets, Europe, Expected return, Global, Loans, Nonperforming loans, NPL ratio, NPL resolution, Profit sharing, Real GDP, SDN, Solvency, Unsecured debt

Publication Details

  • Pages:

    79

  • Volume:

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  • DOI:

    ---

  • Issue:

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  • Series:

    Staff Discussion Notes No. 2015/019

  • Stock No:

    SDNEA2015019

  • ISBN:

    9781513591278

  • ISSN:

    2617-6750

Notes