NPL Resolution Framework

Location:

Regional

Project number:

49243

Business sector:

Non-depository Credit (non bank)

Notice type:

Private

Environmental category:

FI

Target board date:

16 Nov 2017

Status:

Board Approved

PSD disclosed:

25 Sep 2017

Sub-projects signed under this framework

Project Description

Non-Performing Loans (NPL) Resolution Framework to support investments in (i) servicers of NPLs and (ii) NPL portfolios sold by financial institutions ("FIs") in Central & South-Eastern Europe ("CESEE"), Greece, Cyprus and Turkey (the "Region").

Project Objectives

The financial crisis has left many banks in the Region with high levels of NPLs hindering profitability and the ability to on-lend to the real economy. Through minority investments in NPL servicers and/ or portfolios alongside other commercial investors, the NPL Resolution Framework seeks to support the resolution of NPLs in the Region. The proposed NPL Resolution Framework builds upon the high level of engagement and policy dialogue work done by the EBRD under the NPL workstream of the Vienna Initiative.

Transition Impact

The expected transition impact of the proposed NPL Resolution Framework consists of:

  • Resilient: A successful reduction in NPLs will help clean up banks' balance sheets, free up capacity for new lending and contribute to greater financial stability in the Region.
     
  • Competitive: EBRD's investments under the Framework will foster greater competition, transparency and liquidity in the Region's nascent NPL market.

Client Information

The Framework will work with selected entities and Co-Investors ("Partners"):

  • NPL Servicers established in the Region for the purpose of servicing NPLs; and/or
  • NPL Co-Investment Facilities in the form of on- and off-shore special purpose vehicles ("SPVs") established for the purpose of purchasing NPL portfolios alongside Co-Investors sold by financial institutions in the Region.

EBRD Finance Summary

EUR 300,000,000.00

Total Project Cost

EUR 300,000,000.00

Environmental and Social Summary

Categorised FI (ESP 2014). There may be Environmental and Social (E&S) issues associated with the management of NPL portfolios. E&S due diligence will be carried out on each proposed Partner and portfolios under the NPL Resolution Framework to cover both E&S risk and compliance with EBRD's Performance Requirements 2, 4 and 9. Specific E&S Risk Management procedures for the Partners to manage E&S issues in the allocated NPL portfolios may apply including the provision of training on implementation of the E&S procedures as necessary.

Technical Cooperation

None.

Company Contact Information

Ines Rocha
 

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