These initiatives, amongst others, include: the development of a secondary market for both performing and non-performing loans; the establishment of an enhanced framework for out-of-court workouts and pre-bankruptcy procedures, as well as the overhaul of bankruptcy legislation; the recently revised Code of Conduct for banks for the transparent, effective and, where appropriate, flexible treatment of cooperating borrowers facing difficulties in servicing their debt obligations; amendments to legislation to ensure the cooperation of old shareholders in the restructuring of the underlying businesses; the launch of a comprehensive monitoring framework in relation to banks’ non-performing exposure resolution activities, and, finally, a series of targets and key performance indicators that aim at reducing overall nonperforming exposures by 40% by the end of 2019.
On their part, banks need to pursue a more active policy for NPE management, by promoting long-term solutions and multi-creditor workouts, as well as focusing on the restructuring of viable businesses. These lines of action, coupled with the economy’s path out of the recession and back to growth, should bring about a stabilization and, subsequently, a decline in the NPE ratio.