ECB bad-loan policy may also reach smaller banks

The European Central Bank’s nascent policy on working off bad bank loans may be extended to smaller lenders not directly supervised by the ECB, its chief supervisor said on Friday.

The ECB is crafting new guidelines aimed at forcing banks, especially in financially stretched countries such as Italy, Greece and Portugal, to reduce the pile of soured credit sitting on their balance sheet.

“The ECB is currently working on a set of consistent supervisory tools related to the management and workout of nonperforming loans applicable to significant institutions,” Daniele Nouy said in a letter to an Italian member of the European Parliament.

“An extension of the scope of the exercise to the less significant institutions supervised by the national competent authorities will be discussed with the relevant authorities at a later stage.”

Source: reuters.com