Persistent differences in national loan recovery outcomes reinforce case for EU insolvency harmonisation, the EBA analysis finds

The European Banking Authority (EBA) today published its second Report on the benchmarking of national loan enforcement frameworks across the EU Member States. The Report, which was compiled in response to the EU Commission’s call for advice in the context of the Savings and Investment Union’s agenda, calculates the benchmarks for loan recovery outcomes for the EU 27 aggregates and for the individual Member States. The results highlight a high degree of dispersion among different categories of loans, and across the EU27 Member States, for most of the benchmarks and loan categories. In addition, the Report underscores the importance of certain elements related to both the legal framework and the judicial capacity to improve the recovery outcomes.

As part of the Savings and Investment Union (SIU) agenda, in April 2025 the EBA received from the European Commission a Call for Advice for the purposes of gathering data for benchmarking national loan enforcement frameworks (including insolvency frameworks), from a bank creditor perspective. The EBA was invited to update the work carried out in the first benchmarking exercise in 2020 by applying the same methodology, subject to the necessary adaptations and improvements.

The Report provides a rich and unique set of benchmarks on national insolvency frameworks across 27 EU countries, based on loan-by-loan data. The final representative dataset consists of more than 1.4 million relevant loans at the EU 27 Member State level. Overall, the benchmarks presented in this Report are largely aligned with previous findings. Some differences can be observed at country level and are due to the different data sources and macroeconomic environment, methodological issues and some data quality issues.

The Report covers three asset classes: firms, large corporates and small and medium-sized enterprises (SMEs). The benchmarks are calculated for each asset class for recovery rates (gross and net of all costs), time to recovery, and judicial cost to recovery. For firms, the EU 27 Gross Recovery Rates remain stable compared to the 2020 Report (42.5% in 2018Q4 vs. 42.2% in 2023Q3), while Net Recovery Rates have declined (from 40.6% to 37.6%). Judicial Costs to Recovery have decreased (from 4.3% to 3.5%) and the average Time to Recovery has increased (from 3 years to 4.2 years). These results point to higher incurred costs in enforcement processes beyond pure judicial expenses. The aggregate results mask a high degree of dispersion across the EU 27 Member States for most of the benchmarks and in most loan categories.

The Report also finds that the legal system underlying the enforcement framework is a significant factor to explain the recovery rates and time to recovery. Positive characteristics of the enforcement frameworks that are common to the asset classes considered are, for example: (i) legal instruments to enable out-of-court enforcement of collateral; (ii) the possibility for creditors to influence the proceedings through creditor committees; (iii) the availability of debt re-structuring option for SMEs ; and (iv) pre-existence of triggers for collective insolvency proceedings. However, the extent to which such positive characteristics can enhance the recovery outcomes also depends on the legal origin: in some cases, the prevailing judicial processes seem to be already efficient and recovery outcomes could therefore be less positively affected by reform.

Notes to the editors

In April 20205, the EBA formally received a Call for Advice from the EU Commission to benchmarking national loan enforcement frameworks across individual EU Member States. However, the work started already in 2023 on the basis of a draft Call for Advice that allowed the EBA to start the data work.

Contrary to the 2020 Report, for the current analysis, the EBA requested an extraction of the Eurosystem Analytical Credit Dataset (“AnaCredit”), which contains detailed information on individual bank loans in the euro area submitted using a harmonised reporting format across all Euro-Area Member States. The request was formally approved by the ECB Governing Council in March 2023. To address all the points raised in the Commission’s Call for Advice, a complementary data collection was required, and for non-Euro Area banks, a dedicated data collection was conducted.

For anonymity and confidentiality reasons, the information presented in the Report is in aggregate form, such that individual reporting agents or other counterparties cannot be identified, neither directly nor indirectly.