At the end of last year, “significant” banks with particularly high levels of NPLs and, among the other banks, those with core tier 1 capital ratios below 10 per cent, jointly held € billion worth of bad loans net of write-downs, also backed by collateral and personal guarantees.
For these reasons it is not correct to speak of the problem of NPLs as if it were an emergency affecting the entire banking system. Effective supervision involves assessing the actual situation of each bank using detailed information, conducting robust analyses, and taking account of average credit recovery times.