The EU aims to create national banks to take all the “toxic properties” for sale

Berlaymont building, headquarters of the EC / © European Union , 2017. Source: EC – Audiovisual Service / Photo: Mauro Bottaro.

Recently the European Union’s economy and finance ministers have agreed to create several ‘bad banks’ for each country with difficulties in order to let these new public institutions the capabilities to assume the toxic real estate assets of each country.

The so called non-performing loans represent almost € 1 trillion in the EU, which is equivalent to 7% of Community GDP. In Spain, these assets represent 5.9% but in another like Italy it is more than 16%. In this regard, the “bad bank” of Spain (Sareb) is seen by many European politicians as a n example and a reference in order to replicate the same system in other countries, or even to build a European “bad bank” which concentrate the toxic real estate assets under a single and continental institution.

In fact, the European Commission will work on a guide for the creation of ‘bad banks’ at the national level that take toxic real estate assets. The creation of a single entity at European level is however discarded, since the loans are issued under every national legislation.

This is an idea that has been raised by different agencies and at different times and it could be a reality in further months or years.

Source: European Commission

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