Following the transparency report released by the European Banking Authority, Axiom Research team is pleased to share with you a dedicated study describing the recent developments around the European banks NPE provisioning shortfalls.

You will find below a summary of the key points highlighted in the study as well as the original document.

  • The banking union is not yet achieved: European Deposit Insurance Scheme (EDIS) is its most important tool and is still mostly work in progress. To accept EDIS, some countries demand that banks are cleaned up from legacy assets (the famous Non performing Loans or Non Performing Exposures), especially in the periphery. The regulator is working hard on reducing the NPE risk.
  • Non Performing Exposures in European banks is a transparent matter: the European Banking Authority (EBA) publishes extensive and precise data on Non Performing Exposures. Latest data were published last Friday close of business. Here are the results of Axiom’s 2017 modelling.
  • Non Performing Exposures are not 100% of the risk: if Monte dei Paschi’s was NPEs, Banco Popular’s problem was more foreclosed assets (not taken into account in NPEs).
  • We see globally a strong improvement in banks’ asset quality in Europe in particular in peripheral countries.
  • We detail in this note the results, bank by bank, of our NPE/NPL model analysis