But there might be cases where the reasoning and evidence is not convincing at all, and where we might still regard the provisions as insufficiently prudent. In such cases, we will consider taking supervisory action under Pillar 2. And in that case, we would have a broad range of measures at our disposal.
We might, for instance, require the banks to report, in detail, on the evolution of their NPLs; to collect different information; to re-evaluate the collateral taken in to cover the loans; or to apply specific adjustments, such as deductions and filters, to the calculation of own funds. Such actions are nothing new: they are part and parcel of a supervisor’s daily work.