Buch clarifies ECB supervisory mandate, NPLs a priority

The European Central Bank's mandate, as outlined in the SSM Regulation, strictly pertains to the prudential supervision of credit institutions.

Tasks such as the supervision of credit servicers or consumer protection measures fall outside this remit and remain with national authorities.

Similarly, questions concerning monetary policy are distinct from supervisory tasks and should be addressed through separate accountability channels.

From a supervisory perspective, a key priority remains the active management of credit risk to prevent the build-up of non-performing loans (NPLs) on banks' balance sheets.

The ECB actively monitors the asset quality of supervised entities, ensuring they manage their NPL portfolios effectively.

When exposures are deemed unrecoverable, banks often resort to selling NPL portfolios to specialised funds.

This approach proved effective in Greece, where such sales were a primary mechanism for reducing NPL volumes, restoring confidence in the banking sector, and strengthening its resilience.

Although Mr. Farantouris' specific questions fell outside the ECB's direct remit, the letter acknowledges Greek authorities' efforts to strengthen their private debt workout framework.

Initiatives like the new Central Credit Register and adjustments to the out-of-court debt settlement process are noted for their potential to improve risk management.