The European Commission’s NPL action plan is intended to prevent a future build-up of non-performing loans (NPLs) across the European Union as a result of the COVID-19 crisis. Many European businesses and households have come under significant financial pressure due to the pandemic. The strategy aims to ensure that they continue to have access to the funding they need, throughout the crisis.

The NPL strategy has four main goals

  1. further develop secondary markets for distressed assets, which will allow banks to move NPLs off their balance sheets, while ensuring further strengthened protection for debtors
  2. reform the EU’s corporate insolvency and debt recovery legislation, which will help converge the various insolvency frameworks across the EU, while maintaining high standards of consumer protection
  3. support the establishment and cooperation of national asset management companies (AMCs) at EU level
  4. implement precautionary public support measures, where needed, to ensure the continued funding of the real economy under the EU’s Bank Recovery and Resolution Directive and State aid frameworks

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