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.
Reiner Martin is Deputy Head of the European Central Bank’s Macro-Financial Linkages Division (Directorate General Macroprudential Policy and Financial Stability). His areas of responsibility include top-down stress testing, macro-prudential policy assessment and other financial sector analyses including resolution strategies for non-performing loans. He is also closely involved in the ECB’s crisis country work.
Before taking up his current assignment, he was Head of Section in the ECB’s EU Countries Division, responsible for analysing economic and financial developments in Central and Eastern Europe (CEE) and assessing the convergence process of CEE countries.
From 2008-10 he worked at the Oesterreichische Nationalbank (Austrian Central Bank), conducting research on economic and financial developments in emerging markets.
Before joining the European Central Bank, he worked at the German Federal Ministry of Economics and was Research Fellow at the Centre for European Policy Studies (CEPS) in Brussels.
He holds a Ph.D. in Economics from the University of Hamburg (Germany) and Masters degrees in economics and political science from the Universities of Sussex and Bristol (UK).