ECB flags possible delay of more stringent rules on bad loans

By Francesco Canepa and Balazs Koranyi

FRANKFURT, Nov 9 (Reuters) – The European Central Bank is prepared to delay the introduction of more stringent rules on bad bank loans after strong criticism from the European Parliament and Italy, the ECB’s top manager said on Thursday.Daniele Nouy defended the proposed new guidelines, which require banks to reserve more cash for loans that sour, but stated the ECB could push back their intro from Jan. 1 if it could take a look at all the feedback it received.The guidelines, under assessment till Dec. 8, have actually drawn fire from Parliament, raising the risk of an extraordinary conflict between the institutions.”If in between 8 December and the start of the year … we have problems to completely exploit exactly what’s been offered to us, it might suggest that the very first of January 2018 is not be the best date to get begun,”Nouy said in the European Parliament.”I can propose that we offer us a bit more time.” However she firmly insisted the brand-new rules were both required and genuine.

“Now is the correct time for such an additional step, offered

that we currently have really favourable financial conditions in Europe,”Nouy informed the assembly’s financial committee in Brussels.”This addendum, once adopted, falls within the supervisory required and powers of the ECB.”The standards offer banks 7 years to offer credit backed by security and two years for unsecured debt.The Parliament’s legal services workplace stated on Wednesday they intruded on

the assembly’s law-making authorities.” In its current kind, the addendum exceeds these(ECB)prerogatives, which are clearly bank-specific, because it puts down general guidelines relevant to all banks,”the committee’s chair Roberto Gualtieri, an

Italian, said as he presented Nouy’s hearing.”This might only be done though a suitable amendment to legislation.”The big worry for Italy is the rules are likewise being used to the euro zone’s near 900 billion euros($1.04 trillion) stock of existing bad loans, a quarter which sit at Italian banks.Authorities there say that could force banks to curtail loaning or even raise capital on the marketplace, a job that has actually avoided some Italian banks in recent months, setting off state interventions.Sources have actually informed Reuters that ECB staff had certainly started crafting rules on existing bad loans that were designed around those for brand-new soured credit, however were now needing to rethink their technique due to the Italian backlash.The ECB’s vice President Vitor Constancio and Nouy herself have considering that confirmed the technique to the stock of

non-performing loans would be various.($1= 0.8626 euros )(Reporting By Francesco Canepa; editing by John Stonestreet )



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