On 29 March 2017 the European Commission wrote to the EBA on NPL data standardisation. In the Commission’s view, an improved quality, scope, transparency, and availability of the relevant financial information on distressed assets could greatly contribute to functioning secondary markets for distressed assets and potentially reduce the wide bid-ask spreads in the secondary debt market. The Commission goes on to ask the EBA to consider the possibility of issuing guidelines on data standardisation, specifying the information which should be provided by banks looking to sell NPLs.
Specifically, the EBA is asked to:
- Advise on the information necessary for improving the granularity, quality and comparability of the data on NPLs in banks’ portfolios, with a view to facilitating the transfer of these assets off banks’ balance sheets.
- Advise on the feasibility and scope of standardisation of data on NPLs and, in particular, on the data needs for an initial screening of banks’ positions versus a full due diligence of banks’ assets.
- Design common templates that could be used by banks for providing comparable and standardised data on NPLs (including on collateral, valuation and borrowers’ and loan characteristics) to competent authorities, investors and other stakeholders.
- Advise on the possible scope for disclosure at an aggregate level, under Pillar 3, and as part of the EU-wide transparency exercise of the above-mentioned data