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Month: December 2019

Reducing bad loans is vital for Europe’s banks

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The large volume of credit at risk in the balance sheets of European banks could threaten their existence. Banks can only concentrate on strategic and sustainable growth if they can be reduced.

More than ten years after the financial crisis, non-performing loans (NPLs) at risk of default add up to over a trillion dollars in the balance sheets of European banks.

The different development of NPL rates in the individual countries shows that a balanced and sustainable NPL level has not yet been reached in Europe. In order to ensure an NPL ratio of up to 3 percent for all banks, based on last year’s surveys from the EBA Transparency Exercise, NPLs in Europe with a volume of almost 600 billion dollars would have to be reduced.

Even in Germany, where non-performing loans only make up 2.6 percent of the total loan volume, 30 percent of these loans are not covered by risk provisions. This loan volume of USD 20 billion would have a direct impact on banks’ equity if write-downs were necessary.


High pressure on banks to reduce NPL

“For many banks, it’s about nothing less than their own future and long-term survival”
Philipp Wackerbeck, Strategy &

The pressure on banks to reduce non-strategic and non-strategic loans is increasing. The legacy issues limit new lending and competitiveness to China and the United States. This can have serious consequences for the economy, ongoing structural change and the necessary digitalization. This could also affect the relative competitiveness of the EU countries vis-à-vis China and the USA.


Space for profitable business

Space for profitable business

Accelerated deleveraging would provide many banks with scope for much-needed profitable business. In view of the persistently low interest margins and increasing regulatory requirements, it is essential for banks to accelerate the necessary wind-down measures and implement them quickly.

In addition to bad debts, this also applies to unprofitable loans, especially with a view to the expected increase in risk-weighted assets in the event of a compromise in the Basel IV negotiations. Against this background, the primary strategic goal of financial institutions should be to curb capital risks, which are still dormant in Germany and other economically strong European countries.


Four factors for reducing NPL

bad loans

According to the study, four factors enable the successful start-up or improvement of ongoing mining activities both for existing bad banks and for possible national mining units.

1. New organization

First of all, the institutes should set up their organization in the sense of a new beginning and take into account that wind-down organizations clearly differ in their characteristics from conventional banks. This includes a tailor-made operating model with clear responsibilities and incentives for reduction measures, correct credit assessments and a holistic reduction plan.

2. Provision of resources

In addition, banks have to provide the necessary resources. The organization should be equipped with a carefully calculated, regularly evaluated and consistently secured level of financing and liquidity for the entire life cycle.

3. Balance between time and capital

With regard to the reduction activities, the interrelation between time and income in the context of the credit reduction and the hold-to-maturity activities must be guaranteed in the sense of a professional implementation.

4. Coherent mining plan

In addition, banks should pursue a coherent wind-down strategy that ensures a measurable incremental reduction in operations and organization as the portfolio progresses.

Info about closed loan companies

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There are many loan companies on the net and over time some are also down as it either has not been able to drive around or because they have come in the press due to bad business being conducted in the company. The loan companies that are no longer existing at the time of writing are:

Expert loans are no longer an option, but Expert still exists

credit loan money

The fact that these loan companies have been closed down, therefore, protects that there have been poor customer conditions and a plan of return that has not been in order.

However, there are still many other loan companies to choose from, and those with whom Best Lender works are to be trusted. These are all under the supervision of the Danish Financial Supervisory Authority and are therefore your assurance that it is safe to borrow from these companies.

How to find the best loan?

credit loan money

As part of finding the best loan, here at Best Lender you can compare different loan providers with each other. Simply use the loan calculator you find here on the site. In this, you can enter how much you would like to borrow and how far. You will then get an overview of various loan companies that you can borrow from.

You can then compare how much costs are associated with borrowing from the individual companies. Ex. you can see how high the OPP is, ie how much you have to pay per year to have the loan. It is a figure that includes all conceivable costs that may arise with the loan such as interest, fees, and other costs. Among other things, you can borrow consumer loans and car loans.

Therefore, there is nothing left out and it is thus a good indicator of how expensive or cheap a loan will be for you annually. However, be aware that the APR will be affected by the loan period you choose – a longer loan will have a lower APR. However, it simply means that the costs are distributed over a longer period, and thus not that the loan is cheaper, on the contrary – the loan with the longest term will always be the most expensive as more costs have to be paid.

Facts About Online Loans

credit loan money

When you borrow online, it is easier and easier to get a quick loan approved compared to if you went to the bank. This is because you do not have to provide security or need to explain what the borrowed money is to be used for. An approval process will then typically be much shorter. However, it will depend on how much you would like to borrow, as taking out a larger loan will take longer, but still faster than in the bank.

You should be aware that when you do not pledge the loan with the online loan companies, it will mean that the costs and interest you pay on the loan are significantly higher. This is because the online loan companies are at greater risk by lending you money, and this will affect how much you have to pay off on the loan. Therefore, it is worth investigating its options before borrowing to ensure that you do not take out a loan that is too expensive. For this, you simply use the aforementioned loan calculator.