The large stock of non-performing loans (NPLs) held by euro area banks should be more swiftly resolved, while avoiding fire sales. We make a case for a comprehensive European solution, combining various NPL resolution tools. Within the NPL resolution toolkit Asset Management Companies (AMCs) may offer significant benefits by bridging inter-temporal pricing gaps for asset classes such as commercial real estate loans. We outline elements of an EU-wide blueprint for country-specific AMCs, including state aid aspects, asset and participation perimeters, asset valuation, capital and funding structure, and governance. In addition to AMCs, internal NPL work-out will always play an important role in NPL resolution, complemented by private information and trading platforms, and securitisation schemes.
Edward J. O’Brien has been an Adviser in the Directorate General Macroprudential Policy and Financial Stability at the European Central Bank (ECB) since 2014, having previously held various positions in that area. In this role, he has wide-ranging responsibilities, supporting the Directorate General’s senior management in the day-to-day functioning of the area, whilst also participating in or coordinating work-streams on topical macroprudential and financial stability issues. In 2013 and 2014, he played a key role in the preparations for the establishment of the Single Supervisory Mechanism in the euro area, in particular in preparing for the ECB’s Comprehensive Assessment of 130 significant banks. Prior to that, he gained wide-ranging crisis management experience through his role in financial sector work for EU/IMF financial assistance programs, as a member of program negotiation teams in a number of euro area countries. Through these experiences, he gained substantial project management experience and managed a number of large-scale consultancy contracts.
Prior to joining the ECB, Dr. O’Brien worked as an economist at the Central Bank of Ireland and as a part-time lecturer in mathematics and statistics in the Department of Economics, University of Dublin, Trinity College.
Dr. O’Brien’s research has been published in several scholarly journals. He received his Ph.D. from the University of Dublin, Trinity College, where he was a IRCHSS Government of Ireland Scholar.