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European NPL Trends: Addressing Non-Performing Loans in Italy | Guidelines & Solutions

Explore the European NPL scenario, focusing on Italian NPL trends, guidelines for banks, valuation methodologies, and tackling bad loans. Learn about the challenges and solutions regarding non-performing loans in Italy, with a specific emphasis on collateral valuation and the management of NPL transactions. This comprehensive overview provides insights into the current status and future approaches to handling NPLs in the Italian market.

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European NPL Trends: Addressing Non-Performing Loans in Italy | Guidelines & Solutions

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  1. Silvia Cappelli Member of the Board of TEGoVA Member of the European Valuation Standards Board ASSOVIB: Responsible for International Relations & Member of the Technical Scientific Committee NPLs in Italy

  2. …………………………..Europe A ghost is threatening Europe NPL

  3. NPL RATIO IN EUROPE (%) Fonte: European Bank Authority, Risk Dashboard, 2016

  4. Italian gross NPE rate Addendum to the ECB Guidance to banks on nonperforming loans Addendum to the ECB Guidance to banks on nonperforming loans Guidelines on management of non-performing Guidelines on management of non-performing Europeanaverage rate of Big Banks NPL Europeanaverage rate of Big Banks NPL

  5. Italian NPLs: is the solution on its way? Gross NPE and Bad Loans trend NPLs transactions in the Italian market Consumer Credit Mixed Secured/Unsecured Mainly Unsecured Other Note: NPE gross from FY 2017 non including MPS

  6. Toolused for the settlment of NPLS in Italy Focus on RE NPLS

  7. Average time to terminate a foreclosure procedure –a European comparison (months)

  8. GUIDELINES TO BANKS ON NPLS March 2017 Chapter 7 Collateralvaluation for immovableproperty • GOVERNANCE, PROCEDURE AND CONTROLS • General policies and procedures • Monitoring and controls • Frequency of valuations • VALUATION METHODOLOGY • Individual vs indexedvaluations • Appraisers

  9. ADDENDUM TO GUIDELINES March 2018

  10. Guidelines for Valuation of real estate ascollaterals of NPL Loans

  11. Who: Who: When: When: Workinggroup from January 2017 toJanuary2018 – Protocol on January 2018 What: What: Self-regulatoryprotocol to support a more efficient management of debtrecovery Why: Why: Provideguidance for valuers and allplayersinvolved in the foreclosureprocess Reliability Transparency Standardiseddefinitions and approach Accuracy

  12. CONTENTS • The Valuer • The Market Value • The FORCED SALE VALUE/JUDICIAL VALUE (Market Value with Assumptions) • Due Diligence • Valuation Certificate • Appendix 1 – The Valuation of Special Assets • Retail premises • Hotel • Development • Ruralentities • Appendix 2 – Regulatoryframework on competence and independence of valuers • Appendix 3: The leasing contracts

  13. Considerabledifferencebetween the conditionswhereby a propertyissold in the event of an auction or through the free market • The accessto the propertyisoftendenied or actuallyimpossible for the potential buyer • The conditions of the creditoffer are limited, ifcompared to a «traditional» propertypurchase on the free market • The timescalewhereby the new owneractuallytakespossession of the propertyisstillnotdeterminedbecause the propertyoccupieroftencreatesobstacles in order to postpone the sale of the property • The seller/debtorisnotwilling to dispose ofthe property • The valuations are oftencarried out wellbefore the realdisposal date

  14. The Valuation Certificate When: EVS 2016 (Chapter 5 §4.4) Summary of maincontents of the Valuation Report.Itmight be also a separate document or itmight be included in the Valuation Report What: To promotebetteraccess to information for the purpose of property advertising and to provide a standardised information document Why:

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