DBRS: NPL platform is a “positive”, but “small” step

  • ECO News
  • 6 October 2017

The Canadian rating agency stated it does not expect that the nonperforming loan platform will result in a "material reduction in the banks’ high stock of NPLs".

The platform to manage the nonperforming loans, created last month by BCP, Novo Banco (NB) and CGD (Caixa Geral de Depósitos), is a positive step, although it is insufficient in solving the problems in the Portuguese banking, DBRS considers. The Canadian rating agency acknowledges, however, that the platform should accelerate the debtors’ recovery processes.

DBRS Ratings Limited (DBRS) views the initiative agreed by the three largest banks in Portugal to set up a platform to manage Non-Performing loans (NPLs) as a positive, but small step, to strengthen their recovery processes“, stated the agency in a commentary sent to newsrooms. Therefore, the agency does not expect the platform will result in a “material reduction in the banks’ high stock of NPLs”.

Even so, DBRS acknowledges, “the impact on the three banks’ asset quality to be fairly limited, as the risks will be kept on the banks’ respective balance sheets”. On the other hand, the platform will not perform “retail or institutional sales of NPLs”, but is expected to “speed up the recovery processes of common borrowers”.

The agency also stated the Portuguese banking has been registering many progress in the past years, mainly in the first semester of 2017, but underlines “it is essential” that Portuguese banks continue reducing NPL.