On July 10th the European Commission launched a public consultation on the development of secondary markets for non-performing loans and distressed assets and protection of secured creditors from borrowers’ default.Respondents are invited to provide evidence-based feedback and specific suggestions by next October 20th (see here the EU Commission’s internet site).
The EU Commission said in a note (see here the press release) that “the consultation aims to gather targeted input from stakeholders on ways to improve the functioning of the secondary market and more specifically on loan servicing activities by third parties and the transfer of loans away from the originating bank”.
The consultation also “offers interested parties the occasion to give feedback on a possible new instrument, labelled ‘accelerated loan security‘, aimed at increasing the protection of secured creditors from business borrowers’ default to improve the functioning of the SMEs credit market”  (see here the consultation document).
European Commission Vice-President, Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, said: “One of the key areas where the EU can make a contribution is the development of secondary markets for distressed debt. If banks were able to off-load legacy assets from their balance sheet better via secondary markets for credit, they could use their managerial capacity more on evaluating new lending business”.
