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.
Maciej Grodzicki is a Principal Financial Stability Expert at the Macro-Financial Linkages Division of the European Central Bank. Since joining the ECB in 2010, Maciej worked in a number of roles related to stress testing, country monitoring, and macroprudential policy. Recently, he has been contributing to the discussions on resolution of non-performing bank assets and its impact on bank solvency and economic conditions, including with several ECB publications. He has worked on several major stress testing exercises, including the CEBS and EBA EU-wide bank stress tests in 2010, 2011 and 2016, and the 2014 comprehensive assessment of the ECB. During the 2016 EU-wide stress testing exercise, he was responsible for the design of several elements of the adverse macrofinancial scenario and coordinated the work of a team of experts developing a macroprudential extension of the stress test, a top-down exercise focused on the impact of macrofinancial stress on credit supply, feedback loops between bank solvency and economic activity, as well as risks related to interconnectedness and contagion. Between 2011 and 2013, Maciej was involved in the diagnostic exercises of national banking sectors in Cyprus, Greece, Portugal and Slovenia. He took part in the design and monitoring of the implementation of the economic adjustment programme for Cyprus, as a member of the ECB mission team. Before joining the ECB, Maciej spent four years at the National Bank of Poland as a stress testing expert.