ECB Guidance on NPLs Recognizes Value of Securitization

On Monday, March 20th, the European Central Bank (ECB) published final guidance on how European banks should approach the process of moving non-performing loans (NPLs) off their balance sheets. In a shift from a draft version published in September, this final guidance now recognizes "risk transfer and securitization" as a tool for managing the funding and liquidity risks posed by NPLs.

According to a recent Bloomberg BNA article, "the ECB won't set deadlines or formal reduction targets, rather asking banks to come up with 'realistic but ambitious time frames and appropriate options for each portfolio.'"

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