Banks’ ability to lend to the real economy is significantly affected by the quality of their lending portfolios. Non-performing loans (NPLs – loans where the borrowers are not fulfilling their financial commitments to repay in accordance with their contractual agreements) negatively affect banks’ ability to generate new lending into the real economy. Banks with high levels of NPLs on their balance sheets need to divert their resources away from profitable services to managing loans that provide no return. To manage their risks, banks also need to put money aside as a safety net to compensate for the losses incurring from NPLs.

Past financial crises have shown that NPLs can reach levels high enough to become a real problem for banks’ business activities, financial stability and lending to the real economy (NPLs reached EUR 1.2 trillion in June 2015). The EU has put significant efforts into dealing with this high stock of NPLs, including bank recapitalisations and a comprehensive Council action plan that involved the EBA providing guidance on managing stocks of NPLs, supporting secondary markets in the resolution of NPLs by improving availability of data, while also future-proofing the system to improve the quality of future lending with loan origination guidelines.

The EBA continues working on the comprehensive approach to tackling NPLs, also in the context of the COVID-19 pandemic. The current work on NPLs largely builds on the Commission action plan and covers risk analysis, policy and consumer protection perspectives. The current work also focuses on NPL data standardisation, data infrastructure and transparency in NPL markets, and sharing supervisory practices in the monitoring of banks’ NPL management and resolution, with a specific attention to balancing prudential objectives with consumer protection obligations.

This section provides an overview of the EBA's work on the various NPL-related initiatives.

Policy work on NPL

Overview of the EBA policy products related to the management of NPL by banks, including by means of securitisations, as well as future-proofing the system by means of improving credit granting practices.


EBA NPL transaction templates


These templates aim at enhancing standardisation of NPL-related data and at reducing information asymmetries between potential buyers and sellers of NPLs portfolios and facilitating financial due diligence and valuation of NPLs. They also aim at enhancing the granularity, quality and comparability of NPL data and at increasing transparency and market certainty.

EBA NPL reports

Focused analyses of the evolution of NPL in the EU banking system.