August 23 2020

Comments on Technical Amendment on capital treatment of securitisations of non-performing loans

The German Banking Industry Committee (GBIC) has issued its comments to the public consultation of the Basel Committee on Banking Supervision (BCBS) on the technical amandment on capital treatment of securisations of non-performing loans (NPL). In general, GBIC welcomes the initiative of BCBS to support the continuous downward trend of NPL ratios by using the key instrument of securitisation. However, in the view of GBIC the propsal of BCBS is not risk senstive and therefore does not provide the support needed to tackle a potential future increase in NPL ratios. Besides, the proposal could lead to reduced sales prices of NPL for institutions hindering them to reduce their NPL. As COVID-19 is expected to increase NPL ratios, it would be rational to postpone the revision discussed by BCBS until there is enough data on the effect of COVID-19 on NPL.

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