Insider Economy Eurozone banks to get more time to cover bad loans as ECB...

Eurozone banks to get more time to cover bad loans as ECB eases rules

Banks in the euro zone will get more time to set aside cash to cover for loans that have gone or will go unpaid after the European Central Bank bowed to pressure from Brussels to ease its rules on the matter.

Banks will now have three years to set aside cash against a bad loan if it is unsecured, nine years if it is backed by real estate, and seven years for other types of collateral, the ECB said, in line with a timeframe set by regulation approved by the EU Parliament in April.

The move by the ECB’s new chief supervisor, Andrea Enria, ends a two-year dispute between Frankfurt and Brussels on an issue once worth a trillion euros in soured credit – for the most part a legacy of the last recession.

The ECB’s previous, more stringent timeframe had led to an angry backlash from banks and lawmakers, particularly from Italy.

Still, ECB supervisors reserved the right to set different targets “if the specific circumstances really warrant”.

Euro zone banks have almost halved the pile of non-performing loans (NPLs) weighing on their balance sheets. These totalled 642.5 billion euros ($713 billion) at the end of March, compared with over a trillion in 2015.

But the proportion of bad loans out of the total was still a staggering 41.4% in Greece, 21.3% in Cyprus, 11.5% in Portugal and 8.4% in Italy.

“Despite recent progress, the ECB considers it of the utmost importance that the level of NPLs is further reduced, thereby resolving them in a swift manner while economic conditions are still favourable,” the ECB said.

(Reuters)

Top Stories

Updated: Apliki fire extinguished

  A fire which broke out near Turkish-held Lefka and spread to the buffer zone near Apliki has been completely contained, the Forestry Department has...

Labour Ministry opens applications for May 13-June 12 support schemes

  Applications for period 3  (May 13-June 12) of the Labour Ministry's support schemes for businesses, employees and the self-employed have been posted online. In an...

Government condemns vandalism at Limassol mosque

  The government condemns in the strongest manner the vandalism at the Köprülü Mosque in Limassol, government spokesman Kyriakos Koushios said on Monday. "Such actions that...

Limassol: Biker killed in road collision

  A 35 year old biker was killed in a road collision in Limassol on Monday afternoon. He was named by police as Yiorgos Haritou from...

Five more test positive to Covid-19, three from repatriations

The Health Ministry announced five new Coronavirus cases today from a total of 1504 tests, bringing the total number in Cyprus to 949. Dr Leontios...

Taste

Local cuisine: An introduction

Rich in fresh ingredients and tasty herbs, offers the very best of Mediterranean culinary delights. Head out to a tavern and feast on a...

Spiced lamb with beetroot salad and scented yoghurt

Lay the lamb on a tray, skin side down. Rub with crushed garlic, sprinkle with spices and ground pistachios, wrap in plastic wrap and...

Easy seafood pasta with white wine sauce

Ingredients: 2-3 tbsp olive oil 1 garlic clove, chopped 2-3 tablespoons of whipped cream 1/3 cup white wine 300g spaghetti, roughly broken 300-400g of...

Traditional salads that will blow your mind away

This traditional salads will make you actually love salads! Cyprus may be famous for souvla and kleftiko but if you try the traditional salads with...