ECB Gets Tougher on Bad Loans Amid Banks' $1 Trillion Pile
- Supervisor sets time limits on provisioning for the first time
- Guidelines follow Commission’s NPL rules from earlier in week
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The European Central Bank told banks they’ll need to be tougher in dealing with bad loans as euro-zone lenders continue to grapple with soured debts amounting to almost $1 trillion.
For the first time, the banking supervisor laid down time limits for how quickly lenders should set aside capital for loans that turn bad. The guidelines, published Thursday, are the latest attempt by authorities to deal with a problem that still limits banks’ ability to lend and turn a profit a decade on from the financial crisis.