Podcast

Banks and borrowers in distress — Europe’s NPL crisis

European banks are struggling with high amounts of non-performing loans. We look at the reasons behind this crisis, and how it affects banks, borrowers and the European economy as a whole. Finally, we explore potential solutions.

By: Date: March 10, 2017 Finance & Financial Regulation Tags & Topics

This episode of The Sound of Economics focuses on non-performing loans (NPLs), a pressing issue for Europe’s banks. The financial crisis and the recession that followed left European banks with € 1 trillion of NPLs. This has a negative impact on banks, borrowers, and the wider European economy.

A range of experts offer insights into why NPLs are a challenge for banks, and why they are a problem for the European economy as a whole. They also discuss cultural differences in our relationship with debts, and how NPLs affect borrowers and undermine entrepreneurship.

NPLs are a big issue for the European economy, and the show’s guests explore how this issue can be solved. They explain what NPL workout entails, and assess Europe’s progress in streamlining the process. Asset Management Companies (AMCs), so-called “bad banks” are part of the solution, and this episode asks if a European approach to AMCs can be effective. And finally, since both banks and borrowers are negatively affected by NPLs, we address the difficult question of who should bear the loss.

SPEAKERS

Maria Demertzis, Deputy Director, Bruegel

Sharon Donnery, Deputy Governor of the Central Bank of Ireland and Chair of the NPL Task Force at the ECB’s Single Supervisory Mechanism

Piers Haben, Director of Oversight at the European Banking Authority

Alexander Lehmann, Visiting Fellow, Bruegel

CREDITS

Produced and presented by Bryn Watkins

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Policy Contribution

PC 11 2017 2004test

Tackling Europe’s crisis legacy: a comprehensive strategy for bad loans and debt restructuring

Years after the start of the financial crisis, non-performing loans and private debt remain obstacles to the recovery of bank credit and investment.

By: Maria Demertzis and Alexander Lehmann Topic: Finance & Financial Regulation Date: April 21, 2017
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Podcast

Podcast

Labour mobility in Europe

With anti-immigration sentiment on the rise, we look into the issue of labour mobility in Europe. How does migration affect labour markets and how does perception of migration differ from reality? What are the economic challenges for migrants and how do these challenges reflect on social integration? We try to answer these questions with our guests in this episode of The Sound of Economics.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: April 20, 2017
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Podcast

Podcast

A glance into the future — how will AI change our lives?

Technological advancement is moving us towards the artificial intelligence era. How different will our lives be in this new era? How will AI change the nature of work, and how will it affect politics? Is the development of AI something to fear or something to be optimistic about? Our guests tackle these issues and more in this episode of The Sound of Economics.

By: The Sound of Economics Topic: Innovation & Competition Policy Date: April 6, 2017
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Blog Post

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Nicolas Véron

EBA relocation should support a long-term ‘twin peaks’ vision

As the Commission launches a review of European financial supervision, the authors argue that Europe needs to move towards a twin peaks model – dividing supervision of prudential and conduct-of-business issues. But this is a long-term vision, and will require institution building. The immediate priorities are to choose a new home for the EBA and reinforce ESMA.

By: Dirk Schoenmaker and Nicolas Véron Topic: Finance & Financial Regulation Date: April 5, 2017
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Blog Post

Silvia Merler

Italian banks: not quiet on the eastern front

Italian banks are back in the spotlight. After MPS failed to raise enough capital from private investors earlier this year, Banco Popolare di Vicenza (BPVI) and Veneto Banca take centre stage. The story of these two banks epitomises the strategy of delayed reform that has been so characteristic of the Italian banking crisis.

By: Silvia Merler Topic: Finance & Financial Regulation Date: March 31, 2017
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Podcast

Podcast

Special edition - The Treaty of Rome at 60

The 60th anniversary of the Treaty of Rome presents an opportunity to reflect on the progress of European integration so far, and to discuss what the future will bring for Europe. We explore these topics in this special edition of The Sound of Economics.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: March 22, 2017
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Policy Contribution

PC 09 2017 coverEuropean Parliament

Carving out legacy assets: a successful tool for bank restructuring?

Separating ‘legacy assets’ from banks’ core business is central to the rehabilitation of Europe’s banking system. How can Europe progress in its ongoing effort to rid the financial system of legacy assets, and equip it with renewed growth?

By: Alexander Lehmann Topic: European Parliament, Finance & Financial Regulation, Testimonies Date: March 21, 2017
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External Publication

PC 09 2017 EP coverEuropean Parliament

Carving out legacy assets: a successful tool for bank restructuring?

Separating ‘legacy assets’ from banks’ core business is central to the rehabilitation of Europe’s banking system. How can Europe progress in its ongoing effort to rid the financial system of legacy assets, and equip it with renewed growth?

By: Alexander Lehmann Topic: European Parliament, Finance & Financial Regulation, Testimonies Date: March 17, 2017
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Policy Contribution

PC 07 2017 cover

What happened to global banking after the crisis?

The global financial crisis allegedly led to the end of global banking. However, Dirk Schoenmaker finds that reports of the demise of global banking are premature.

By: Dirk Schoenmaker Topic: Finance & Financial Regulation Date: March 14, 2017
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Policy Contribution

PC 06 2017 cover

How not to create zombie banks: lessons for Italy from Japan

How can Italian banks address the issue of non-perfoming loans? What lessons can they learn from Japan?

By: Christopher Gandrud and Mark Hallerberg Topic: Finance & Financial Regulation Date: March 8, 2017
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Working Paper

WP 2017_02 cover

Institutional investors and home bias in Europe’s Capital Markets Union

Zsolt Darvas and Dirk Schoenmaker find strong support for the hypothesis that the larger the assets managed by institutional investors, the smaller the home bias and thereby the greater the scope for risk sharing.

By: Zsolt Darvas and Dirk Schoenmaker Topic: Finance & Financial Regulation Date: March 6, 2017
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Blog Post

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Nicolas Véron

Brexit should drive integration of EU capital markets

Brexit offers EU-27 countries a chance to take some of London’s financial services activity. But there is also a risk of market fragmentation, which could lead to less effective supervision and higher borrowing costs. To get the most out of Brexit, the EU financial sector needs a beefed up ESMA.

By: Dirk Schoenmaker and Nicolas Véron Topic: Finance & Financial Regulation Date: February 24, 2017
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