Six years and countless working lunches after the financial crisis began, European regulators have at last nearly come to grips with one of its root causes.
The European Banking Authority moved to make it easier for investors to compare the health of euro-zone banks, proposing common definitions in areas such as when bank loans have turned sour….
Bank assets such as loans should be classified as nonperforming if payments are more than 90 days overdue, the EBA said. The banking authority also is preparing standards for the use of forbearance, allowing investors to compare banks’ use of concessions to borrowers who have run into trouble.
Clearly defining nonperforming loans and forbearance will let the ECB compare euro-zone banks across borders more easily.