15 MARS 2018
In September 2016, RICS was invited by the Italian Banking Association to take part in a working group responsible for drafting new guidelines for the valuation of non-performing loans (NPL) real estate collateral.
The purpose of the initiative was to provide operational guidance to valuers working on NPLs and to foster greater consistency and transparency in the valuation of real estate collateral subject to foreclosure proceedings.
As a result, on 23 January 2018, I had the pleasure of signing the official document of the Linee Guida per la Valutazione degli Immobili a Garanzia dei Crediti Inesigibili (Guidelines for the Valuation of NPL real estate collateral) on behalf of RICS, alongside other prominent market stakeholders.
The new guidelines for the Italian valuation community acknowledge the recommendations of the European Central Bank (ECB) Guidance to banks on non-performing loans, which expressly require the adoption of high level valuation professional standards as those provided by the RICS Red Book.
The guidelines mark a major step forwards in the direction of increasing transparency and in the adoption of International Valuation Standards (IVS) and the RICS Red Book.
Although non-binding in nature, the ECB guidance is intended to clarify the supervisory expectations regarding NPL identification, management, measurement and write-offs in areas where existing EU legislation or guidelines lack specificity.
It outlines measures, processes and best practice which banks should incorporate when tackling NPLs, an issue which should be a priority for banks. The development of the guidance and subsequent regional guidelines marks an important step in addressing NPLs across the euro area.
Referencing the RICS Red Book in this important guidance means recognising RICS’ key role in supporting a stable, liquid and transparent property market.
RICS Red Book provides a practice framework for the consistent application of International Valuation Standards (IVS) throughout the world. This means that valuations according to the RICS/IVS are consistent and comparable across EU Member States, something that no other valuation standard provides at the same level.
This is also relevant for reducing transaction costs in the field of cross-border valuations. It is RICS’ view that high level valuation standards should continue to converge across the EU, and beyond, as real estate markets continue to expand across national and international boundaries.