European Central Bank is ‘OVERSTEPPING its mandate’: Backlash at ‘bad loan measures’
THE European Central Bank (ECB) is keeping to its plan to toughen bad-loan rules for euro-area banks despite criticism from Italy and the Council of the European Union.
By LAURA MOWAT
Express.co.uk
Tue, Nov 28, 2017
Lawmakers, particularly those from Italy, have argued that the rules in their current form overstep the ECB’s mandate.
In a further blow to the ECB proposal, the Council of the European Union said the bank does not have the mandate for its plan to ask euro area banks to set aside more cash to cover bad loans.
The proposals require banks to hold cash against the unsecured part of any new non-performing loans within two hours.
ECB chiefs wants to do more to force banks to deal with their non-performing loans.
The central bank’s head of supervision said the wording of the plan will be improved and some concessions could be made.
The European Parliament’s legal services has also said that the ECB would be overstepping its authority with its proposed guidelines.
The ECB will require bans to provision fully for loans that go bad from the start of next year, with a two-year deadline for unsecured non-performing debt and seven years for secured.
Senior fellow at the Brussels-based think tank Bruegel, Nicolas Veron, said the ECB’s supervisory actions on non-performing loans “will be largely aligned with the initial proposal, and that’s good”.
But Mr Veron added: “On individual banks, they must give wooden answers, but on policy issues it’s a bit different.
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