THE INTRODUCTION OF THE UNIQUE MECHANISM OF SURVEILLANCE AND THE REDUCTION OF NON-PERFORMING LOANS

• Main Author: Nicoleta Georgeta PANAIT
• Format: Article
• Language: English
• Published: Nicolae Titulescu University Publishing House 2014-05-01
• Series: Challenges of the Knowledge Society
• Subjects: financial regulations; non-performing loans; interbank market reform; banking system; banking union.
• Online Access: http://cks.univnt.ro/uploads/cks_2014_articles/index.php?dir=07_finance_accounting%2F&download=CKS+2014_finance_accounting_art.072.pdf

The introduction of a harmonized framework for financial supervision allows the minimizing of tax consequences and possible systemic bank failures. Banking union project will have impact on both the micro-prudential supervisory practices and the prudential supervision framework in the euro area and in the state members that will decide to participate in this project. The non-performing loans (NPL) trend in the countries of Southeastern Europe further shows that nonperforming loans will increase in some of the states of Eastern Europe affecting credit flows and profits made by the banks. The activities conducted by the banks cannot be estimated, quantified and especially eliminate all risk, lending generates NPL even lending procedures were followed in accordance with the laws and regulations in force. Romania has the highest rate of non-performing loans in the region and the fact is generated because of difficulties in removing non performing loans from banks' balance sheets. In order to increase the volume of loans it is necessary to decrease of nonperforming loans from banks' balance sheets. To identify the optimal strategy for managing non-performing loans is necessary to continually monitor the performance and providing rapid adaptation to the dynamic environmental factors and changes in the characteristics of the loan portfolio. European Central Bank will consistently enforce a set of unique rules apply to the group of euro area credit institutions will directly supervise credit large institutions and will monitor supervisory practices of credit institutions less significant conducted by competent national authorities.