Tag: Non-performing loan

The European Commission’s proposal to accelerate the reduction of non-performing loans

This week the EC presented concrete steps to tackle non-performing loans, see this page. Ouch One and Ouch Two Two reasons why this is an interesting proposal. First, it forces banks to deduct any provisioning shortfalls directly from Common Equity Tier 1. Ouch! Second, the proposal amends the CRR, which is a Regulation. And we… Read More The European Commission’s proposal to accelerate the reduction of non-performing loans

@cetier1

The Italian DTAs

Today the Wall Street Journal reported on an alleged loophole in EU bank capital rules. The loophole pertains to deferred tax assets (DTAs), a regulatory area where tax rules and accounting rules meet. Apparently some countries exploit a DTA loophole: Italy, Spain, Portugal and Greece. Uh oh, these countries, the usual suspects. There is something really wrong here.… Read More The Italian DTAs

@cetier1

Cetier posts a critical note on capital shortfall research.

My post “The Greatest Hoax on European Bank Capital Shortfalls ever?”, a pastiche on a similarly titled paper by researchers Viral Acharya and Sascha Steffen just appeared on Pieria. Capital shortfall papers, with such a wide range of results are a reason to worry about the correct definition of solvency, or the lack thereof.

@cetier1

Brief comment on my post: EBA publishes standards on NPL, etc

Apparently EBA chose a relatively friendly route here, as it offers banks to report NPL and forbearance via FINREP, a reporting tool that is close to financial reporting. Bank also will have to report via COREP, and COREP determines the solvency calculations of banks directly. Here is EBA’s justification for not tampering with the solvency… Read More Brief comment on my post: EBA publishes standards on NPL, etc

@cetier1