(7)Such a supervisory approach to coverage of NPEs is considered to be an effective tool to mitigate two key risks. The first is the persistence of material stocks of NPEs with high vintages (also referred to as legacy NPEs) and limited provision coverage, which constitute lasting sources of potential further losses and restrict banks’ capacity for new lending. The second is the possibility of inconsistencies in the prudential treatment of those NPEs which are subject to the deduction requirement under Regulation (EU) No 575/2013 and those which are not, where those inconsistencies are not justified by specific circumstances.