## Spain: Financial Sector Assessment Program-Technical Note-Impaired Assets and Nonperforming Loans

_IMF Staff Country Reports, November 13, 2017_

## Source details

**Canonical URL:** [Spain: Financial Sector Assessment Program-Technical Note-Impaired Assets and Nonperforming Loans](https://www.imf.org/en/publications/cr/issues/2017/11/13/spain-financial-sector-assessment-program-technical-note-impaired-assets-and-nonperforming-45394)

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## Bibliographic details
- Published: November 13, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484327210.002

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### 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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## Content in this bundle

- **Country Report**
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_Source: https://www.imf.org/en/publications/cr/issues/2017/11/13/spain-financial-sector-assessment-program-technical-note-impaired-assets-and-nonperforming-45394_