Figure - uploaded by John Fell
Content may be subject to copyright.
Figure C.1 Schematic outline of a securitisation-based approach to working out multi-creditor corporate NPLs
Source publication
Numerous European and national initiatives have been launched since 2014 to reduce non-performing loan (NPL) stocks on euro area bank balance sheets. NPL ratios have fallen as a result, but very gradually, mainly thanks to sales to non-bank investors. Despite stronger market activity, prices paid by NPL investors have only improved marginally and c...
Contexts in source publication
Context 1
... for a discussion on NPL transaction platforms. To leverage the potential of the scheme, it could be combined with securitisation (see Figure C.1, step 3). A securitisation scheme would facilitate the funding of the NPL transfers and provide a strong incentive for banks to participate, as the benefits of securitised funding may be substantial. ...Context 2
... servicers are an essential element of the described approach and would need to be appropriately incentivised to rehabilitate viable companies. Loan servicing would be assigned to an independent specialist firm, in line with the common practice for NPL sales and securitisations (see Figure C.1, step 3). Their efforts should focus on offering sustainable long-term loan modifications, taking advantage of reduced coordination needs with other creditors and avoiding judicial procedures. ...