Yale School of Management

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European Commission gives tentative support for "network" of public asset management companies

December 22, 2020
On December 16, the European Commission (EC) announced its support for the creation of a network of national asset management companies (AMCs) (also known as “bad banks'') and encouraged Member States to create AMCs. Such institutions would acquire and manage non-performing assets (NPAs) from the balance sheets of lenders in their home countries. Assuming participating lenders can withstand the losses associated with selling these NPAs, this could free up space for new loans and ultimately bolster profitability. European banks have had profitability problems since the Global Financial Crisis. The Wall Street Journal recently wrote that the proposal shows that “Officials are publicly acknowledging a key lesson from the 2008 crisis: Fast balance-sheet cleanup helped U.S. banks recover quickly, while European lenders struggled under a lingering hangover of bad loans.” Continue reading “European Commission gives tentative support for "network" of public asset management companies”