According to official data, Italian banks’ reported around 200 billion euros ($220.5 billion) of nonperforming loans—approximately 8% of total loans. However, Wells Fargo analysts argue an additional €160 billion of loans could soon be classified as NPL, bringing the NPL ratio at an “eye-popping” 15% of their loan portfolios.
This is the June 7, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document. This update includes the following:
The federal banking agencies reiterated the disclosure requirements for the annual stress tests conducted by financial institutions with assets between $10 billion and $50 billion. These companies are required to conduct annual stress tests, with the results disclosed to the public for the first time this year. The firms are required to disclose the types of risks included in the stress test; a summary description of the test methodologies; estimates of losses, revenue, and net income; post-stress capital ratios; and an explanation of the most significant causes for the changes in regulatory capital ratios. The companies must disclose stress test results between June 15 and June 30.
The European Commission announced that it extended the exemption for pension funds from central clearing requirements for their over-the-counter (OTC) derivative transactions. The extension is two years, through August 16, 2017. The extension is designed to provide time to develop technical solutions for the transfer of non-cash collateral to meet collateral calls.
The European Commission announced a six-month extension in implementing capital requirements for EU banking groups’ exposures to central counterparties (CCPs). The capital requirement depends on whether a CCP is ‘qualifying’ or ‘non-qualifying.’ To be qualifying, a CCP has to be authorized (for those established in the EU) or recognized (for those established outside the EU). The process of authorization and recognition takes time, and the processes are not be fully completed, the European Commission has adopted an implementing act that will now extend the transitional phase to December 15, 2015. The extension also applies to third country CCPs seeking recognition in the EU. Only CCPs established in a third country that the Commission has determined have equivalent CCP requirements can be recognized in the EU. The Commission recently adopted decisions of equivalence for Hong Kong, Japan, Singapore, and Australia, but other jurisdictions do not have equivalent status yet. Equivalence assessments are time-consuming. This extension will allow time for that work to continue.