NPL meaning

ARCHIVED: This Practice Note is archived and is no longer maintained. A bank loan is treated as a non-performing loan (NPL) if more than 90 days pass without the borrower making the agreed instalments or interest payments. Banks experienced an accumulation of NPLs in their books when borrowers' inability to repay was intensified by the financial crisis and subsequent recessions. When NPLs are proportionately high, banks' capacity to manage the riskiness of their lending is diminished. NPLs are a supervisory priority for the European Central Bank (ECB), which monitors the overall level of NPLs across euro area banks. Under the supervisory review and evaluation process (SREP), the ECB assesses whether individual banks adequately manage loan risk and whether they have suitable strategies, governance arrangements and processes in place. The ECB also regularly undertakes co-ordinated exercises to review the asset quality of the banks it directly supervises—it works with national supervisors to establish a consistent and effective approach to tackling and reducing bad loans, drawing on best practices as set...

Corporate Rescue and Insolvency The April 2024 edition of Corporate Rescue and Insolvency can now be accessed in Lexis +® UK (subscription required). This issue features the following articles: headwinds for the shipping industry and the global economy? The impact of the Red Sea conflict (2024) 2 CRI 43 by Nick Austin, partner, Linton Bloomberg, partner, Colin Cochraine, senior associate and Alicia Cranston, trainee solicitor at Reed Smith Adler restructuring plan overturned: fair's fair?...

In this issue: Key R&I law developments Corporate insolvency processes Creditors' participation Personal insolvency Restructuring Directors and insolvency Financial institutions Key dates for R&I professionals Daily and weekly news alerts Key R&I law developments Companies House to roll out changes from March 2024 following ECCTA 2023: Louise Smyth, Chief Executive and Registrar, has outlined a series of updates due from March 2024, following the October 2023 implementation of the Economic Crime and Corporate Transparency Act. The measures aim to strengthen Companies House’s intelligence capability and deliver enhanced support for people affected by fraud. See: LNB News 05/01/2024 34. DBT refreshes guidance on Russia-related sanctions compliance: The Department for Business and Trade, alongside the Export Control Joint Unit, has released updated guidance titled ‘Complying with professional and business services sanctions related to Russia’. The revisions add new sections on the aims of the prohibitions, as well as on scope and compliance. See: LNB...

In this issue: Sustainable finance and ESG round–up UK and international sanctions Economic Crime and Corporate Transparency Act 2023 Registered Office Address (Rectification of Register) Regulations 2024 Service Address (Rectification of Register) Regulations 2024 Principal Office Address (Rectification of Register) Regulations 2024 Finance Bill Lending Secondary trading Security over land Intercreditor Sustainable finance Debt capital markets Derivatives Structured products and securitisation Fintech Daily and weekly news alerts New and updated content Useful information Sustainable finance and ESG round–up Sustainable finance and ESG weekly round–up For a summary of this week’s Sustainable finance and ESG developments, refer to: Sustainable finance and ESG weekly round-up—11 January 2024. UK and international sanctions DBT updates guidance on compliance with sanctions related to Russia The Department for Business and Trade (DBT), together with the Export Control Joint Unit, has issued an updated guide entitled ‘Complying with...

Loan market and developments A concise outline of the current Danish loan market and notable recent developments follows. Most corporate lending still comes via bank facilities—both committed and uncommitted—and is frequently secured. Security packages commonly comprise: shares; real property; bank accounts; and a floating charge spanning all moveable property, receivables and intellectual property of the borrower. Financing for both private and commercial real property is most often arranged through mortgage credit loans provided by mortgage credit institutions, with the relevant property given as security. The Danish Capital Markets Act introduced SME Growth Markets in Denmark for small and medium-sized companies (SMEs). In the preparatory remarks to the Act, it is noted that SMEs have experienced difficulties obtaining finance since the financial crisis. By establishing SME Growth Markets in Denmark, the aim is to grant SMEs easier access to the capital markets and thereby improve funding opportunities...

STOP PRESS: The Loan Market Association (LMA) has issued refreshed editions of the standard terms and conditions for Par and Distressed Trade Transactions, the full and complete sets of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide; all of which take effect from 17 March 2026. The changes include the deletion of LIBOR references, updates to IBOR rate definitions and the Target2 definition, and revised ERISA representations that incorporate further exemptions from the prohibited transaction rules under ERISA and the US Internal Revenue Code. The revised documentation is accessible to LMA members only via the LMA’s Documentation Hub. Is loan trading on the secondary market a regulated activity? The UK position The use of information within the UK loan secondary debt market remains somewhat unclear. The UK regulatory framework oversees firms that deliver services to clients connected to ‘financial instruments’ and the markets where those instruments are traded. Loans are not treated as ‘financial instruments’ (commonly taken to include shares, bonds,...

This glossary sets out numerous expressions frequently encountered in the restructuring arena. Words appearing in the definitions in bold are explained in other entries in this glossary. For further banking terminology, see the principal Banking & Finance Glossary. Restructuring glossary—A Acceleration: Acceleration means the agent, acting on directions from the majority lenders after an event of default, takes formal action, for example calling for early repayment of the facility. Ad-hoc committee: A temporary creditors’ group (often contrasted with a formal committee) that lacks any entitlement to official recognition. Administration: A process under the IA 1986 in which a financially distressed company is operated by an administrator as a going concern before longer-term outcomes, such as break-up and sale, are pursued. Administrator: An Insolvency Practitioner named by the court, a Qualifying floating charge holder, the directors or the company, to take control and fulfil one of the purposes in IA 1986, Sch B1. Administrative receivership: Arises when a company breaches the terms of...