Basel Committee takes edge off toughest part of NPL proposals

By Owen Sanderson
26 Nov 2020

The Basel Committee has backed down from tough new changes which could have raised the costs of financing non-performing loan portfolios, allowing banks to use external ratings to assess the risk of NPL securitizations.

The Committee proposed a package of measures in June described as a “technical tweak” but with far-reaching implications for banks’ abilities to finance the purchase of NPLs.

The “technical tweak” was supposed to solve a real problem in NPL financing — existing risk calculations struggled to deal with the ...

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