2017. 1 Non-Performing Loans

2017. 1

EUROPEAN ECONOMY

Banks, regulation, and the real sector

Giorgio Barba Navaretti, University of Milan, Chief editor Giacomo Calzolari, University of Bologna, Co-editor Alberto Pozzolo, University of Molise, Co-editor

Non-Performing Loans

Preliminary draft: 27th June 2017

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What is European Economy

European Economy ? Banks, Regulation, and the Real Sector (europeaneconomy.eu) is a new on line journal to encourage an informed and fair debate among academics, institutional representatives, and bankers on the regulatory framework and its effects on banking activity and the real economy. It is an independent journal, sponsored by Unicredit Group.

The journal aims at becoming an outlet for research and policy based pieces, combining the perspective of academia, policy making and operations. Special attention will be devoted to the link between financial markets and the real economy and how this is affected by regulatory measures. Each issue concentrates on a current theme, giving an appraisal of policy and regulatory measures in Europe and worldwide. Analysis at the forefront of the academic and institutional debate will be presented in a language accessible also to readers outside the academic world, such as government officials, practitioners and policy-makers.

This issue of European Economy presents and discusses the foremost proposals of State supported vehicles like Asset Management Companies, system-wide securitization schemes and other solutions to deal with the very large backlog of European Non-Performing Loans (NPLs) brought forward by the main international organizations and prominent scholars. Part of this backlog will be resolved through market based solutions. But in many cases, because of the deadly mix between market failures and banks' resolutions and recoveries, State supported schemes are also necessary. These schemes, even though national, will have to be based on a common European blueprint, to favour a rapid and smooth recovery of the banking sector. This issue takes stock of all the main proposals on the table, highlighting their many common ingredients and the questions still to be sorted out. A meta solution based on a sound compromise between these is necessary and technically and politically feasible. The issue discusses how.

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Table of contents

From the Editorial Desk

Getting rid of NPLs in Europe

by Giorgio Barba Navaretti, Giacomo Calzolari, Alberto Franco Pozzolo

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Numbers

by Jos? Manuel Mansilla-Fern?ndez

25

Institutions

by Jos? Manuel Mansilla-Fern?ndez

33

A Bird Eye (Re)view of Key Readings

by Jos? Manuel Mansilla-Fern?ndez

39

Proposals

Completing the Repair of the EU Banking Sector- A Critical Review of an EU Asset Management Company

by Andrea Enria, Piers Haben, and Mario Quagliariello

51

A Role for Systemic Asset Management Companies in Solving Europe's NonPerforming Loan Problems

by John Fell, Maciej Grodzicki, Reiner Martin, and Edward O'Brien

63

A Strategy for Resolving Europe's Problem Loans

by Shekhar Aiyar, Wolfgang Bergthaler, Jose M. Garrido, Anna Ilyina, Andreas (Andy) Jobst, Kenneth Kang, Dmitriy Kovtun, Yan Liu, Dermot Monaghan, and Marina Moretti

75

Utilizing AMCs to Tackle the Eurozone's Legacy Non-Performing Loans

by Emilios Avgouleas and Charles Goodhart

83

Why We Need to Breach the Taboos on European Banks' Non-Performing Loans

by Brunella Bruno, Giuseppe Lusignani, and Marco Onado

97

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Discussion

Reducing Non-Performing Loans in Europe

by Ralph De Haas, Bojan Markovic and Alexander Plekhanov

107

Non-Performing Loans and State Aid Rules

by Christophe Galand, Wouter Dutillieux, and Emese Vallyon

117

Resolution Strategies for Non-Performing Loans: A Post-Crisis European Perspective

by Helen Louri

135

Systemic Solutions to Systemic Crises. Dealing with NPLs in the Eurozone

by Rym Ayadi, Giovanni Ferri, and Rosa M. Lastra

145

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From the Editorial Desk

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