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January 28, 2021 ECB banking supervision returns to warn of the risk, due to the Covid crisis, of "a sudden increase in non-performing loans" which have not "completely" now emerged in portfolios.
This was stated by the chairman of the supervisory board Andrea Enria, illustrating the results of the Srep for 2021, according to which the authorities' attention was "focused on the adequate classification and measurement of risks in bank financial statements and on the degree of preparation to manage promptly debtors in difficulty ".
For this reason, the ECB "communicated a considerably higher number of recommendations to the banks".
"Banks do not have to wait for the end of the moratorium on loans to clean up their balance sheets and bring out loans with the probability of not being repaid (UTP)".
According to Enria, the moratoriums, which are useful for "giving breath to banks and customers", "should not be taken as a justification for postponing" the classification of loans as Utp.
We must avoid, Enria warns, "a surge in impaired loans" when the measures expire.