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.
John Fell is the Deputy Director General for Macroprudential Policy & Financial Stability in the ECB. He is also the chair or co-chair of a number of international working groups – including the Eurosystem’s Macroprudential Policy Group (MPPG), the European Systemic Risk Board’s (ESRB) Instrument Working Group (IWG), and the ESRB’s task force on stress-testing. He is a member of the ECB’s Financial Stability Committee, the ESRB’s Advisory Technical Committee, the Financial Stability Board’s Analytical Group on Vulnerabilities (AGV) and the EU Financial Services Committee. He led the stress-testing work for the ECB’s “comprehensive assessment” in 2014 as well as EU-wide banking sector stress-tests coordinated by the Committee of European Banking Supervisors (CEBS) (2009, 2010) and the European Banking Authority (EBA) (2011, 2014). His crisis management experience is extensive, including leading ECB financial sector work for EU/IMF financial assistance programs and he was a member of (“troika”) program negotiation teams in several euro area countries (e.g. in Ireland, Portugal and Spain). Between 2003 and 2010 he was Head of the ECB’s Financial Stability Division and Editor of the ECB’s Financial Stability Review from its launch in 2004. Before moving to the financial stability area in 2003, he was an Adviser on capital market and financial structure issues in the Monetary Policy Directorate of the ECB. Prior to joining the ECB in 1998, as a principal economist, he held various positions at the European Monetary Institute (EMI) and the Central Bank of Ireland. John holds postgraduate degrees in Economics (1987) and in Finance (1993) from University College Dublin and Dublin City University respectively.