COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL AND THE EUROPEAN CENTRAL BANK Fourth Progress Report on the reduction of non-performing loans and further risk reduction in the Banking Union
1. This document outlines a Communication from the European Commission on the reduction of non-performing loans (NPLs) and further risk reduction in the Banking Union (‘the Communication’). It is the fourth Progress Report of its kind, in response to an agreement by the Council of the European Union (‘the Council’) to assess, on an ongoing basis, the progress made on the reduction of NPLs.
2. Non-performing loans are loans where the borrower may not be pasying interest or making repayments. The Communication gives a brief overview of the context of risk reduction in the EU, before updating on recent developments in relation to NPLs. It then outlines progression in various measures introduced to reduce the risks in the banking sector from NPLs.
The broader context: risk reduction in the Union
3. The Report states that the Union and its Member States have implemented several measures to reduce risk in the European banking sector. This means that Banking Union banks are now better capitalised, better supervised and more resolvable. In addition, the Commission has made progress on further steps to reduce risk in the banking sector in recent months, including: