Stress tests prompt NPL rethink

Banks expected to sell NPLs to improve stress-test resilience

rubbing-out-debt

The growing importance of stress tests in bank regulation is prompting European institutions to reconsider their traditionally clingy approach to non-performing loan (NPL) portfolios, and leading to forecasts of a dramatic increase in the supply of bad debt. PwC, for example, anticipated a jump from €11 billion in 2010 to €60 billion last year. This is music to the ears of distressed debt investors, but they may need to be patient. The logic is straightforward: in the past, if banks