Europe banks hold €988 billion in NPLs: IMF

Bank in Europe still hold “a very high” €988 billion ($1.17 trillion) in non-performing loans (NPLs) on their balance sheets, new estimates from the International Monetary Fund showed on Wednesday.

Peter Dattels, deputy director of the IMF’s monetary and capital markets department, said recent developments have been encouraging and the total of bad loans should decline to €900 billion by the end of the year.

Italian banks should be able to sell €65 billion in NPLs this year and sales by Spanish banks should account for an additional €30 billion reduction, Dattels said.

The stronger recovery in Italy and Spain has also decreased the flow of new bad loans, he added.

In Portugal, NPLs level remains very high, falling to 15.5 percent of total loans in the second quarter after peaking at around 18 percent last year, Dattels said.

Without a more concerted effort to reduce nonperforming loans, financial stability concerns could reemerge in the euro area, the Washington-based fund further said.