Spain: Financial Sector Assessment Program-Technical Note-Impaired Assets and Nonperforming Loans
IMF Staff Country Reports, November 13, 2017
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- Spain: Financial Sector Assessment Program-Technical Note-Impaired Assets and Nonperforming Loans
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Bibliographic details
- Published: November 13, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484327210.002
Key findings
- The note discusses findings and recommendations from the Financial Sector Assessment Program for Spain in the areas of impaired assets and nonperforming loans (NPLs).
- The size of the problem assets varies significantly across banks.
- Problem assets are concentrated in banks exposed to residential mortgages and real-estate-related firms, whose NPLs represent about 57 percent of all NPLs.
- A tough stance on the implementation of the European Central Bank (ECB) guidance on NPLs is desirable.
- Ideally, in the case of Spain, the cleanup should be completed before the expiration of the ECB’s long-term support.
- Targets to reduce problem assets should be ambitious, and failure to comply should have prudential consequences.
Policy recommendations and implications
- Implement ECB guidance on NPLs with a firm supervisory approach.
- Set ambitious targets to reduce problem assets across banks, recognizing significant heterogeneity in problem-asset size and concentration.
- Apply prudential consequences for banks that fail to meet cleanup targets.
- Prioritize completing the cleanup before the expiration of ECB long-term support to reduce systemic risk.
Thematic coverage and keywords
- Subject areas: Asset and liability management; Banking; Collateral; Debt restructuring; Distressed assets; Financial institutions; Financial sector policy and analysis; Loans; Nonperforming loans.
- Keywords included in the note: assessment bank, Banco de Valencia, bank, bank lending rate, bank portfolio, cash flow, clean-up process, Collateral, CR, Debt restructuring, Distressed assets, Europe, force bank, foreclosed assets, FROB, further bank recapitalization, ISCR, legacy assets, loan, Loans, Nonperforming loans, NPL, NPL management strategy, requiring bank, Sareb.
International Monetary Fund. "Spain: Financial Sector Assessment Program-Technical Note-Impaired Assets and Nonperforming Loans" (November 13, 2017).
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- Country Report