Posted by Conor Houlihan and Mike Danielewsky on 14 July 2021

DLA Piper’s Portfolio Solutions Group has started its internal review process on EBA’s consultation process for NPL transaction data templates (EBA/DP/2021/02).

The EBA developed standardised NPL data templates in 2017 to help facilitate financial due diligence and the valuation of NPL transactions. These templates aimed to reduce information asymmetries and barriers to entry in EU NPL markets, and provide a benchmark for a common data standard for transactions, enabling NPLs to be compared against one another and across jurisdictions. This shall address inefficiencies associated with information asymmetries and fragmented approaches across the single market. The EBA’s initiative on NPL data templates is part of a wider action plan to tackle NPLs in Europe and to provide additional tools for banks in the management and reduction of NPLs on their balance sheets.

In the EBA guidelines on management of non-performing and forborne exposures, banks are required to introduce and operationalise NPL reduction strategies. There are several tools available to banks to manage and reduce NPLs - secondary market transactions is one of these tools. To this end, the data templates aim to support banks’ strategies to manage and reduce their NPLs, particularly in the aftermath of the COVID-19 pandemic.

The Consultation period will end on 31 August 2021. Given both DLA Piper’s European footprint in the NPL market and its strong pan-European activities, upon consultation with its various industry clients they will also participate in this consultation process. DLA Piper will provide, in particular, country specific views and a diverse approach taking those country specific market nuances into account. If you have views in this respect, please do not hesitate to contact your local DLA Piper contact or the central contacts, Conor Houlihan or Mike Danielewsky.

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