ECB Prods Lenders on Bad Loan Pile With Bank-Tailored Guidelines
- ‘Financial features,’ individual bad debt levels considered
- Guidelines are said to aim to bridge German-Italian tensions
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The European Central Bank will give eurozone lenders another prod in efforts to tackle bad debt levels that it says are still “far too high” compared with other regions.
The ECB will communicate its expectations to banks for the reserves they should hold against non-performing loans, which weigh on their profit and ability to lend. Those guidelines will be tailored to the individual lenders’ levels of bad debt, and those lenders’ “financial features,” but will still be applied “in a consistent way across comparable banks,” the ECB said in a statement Wednesday.