BUSINESS

ECB bad-loan rule to have an impact on local banks

TAGS: Finance

Standard & Poor’s has singled out Italian, Greek and Portuguese banks as the most affected by new European Central Bank rules concerning impaired debts. The credit rating agency said on Monday that the rules could hit Italian banks particularly hard and lead them to cut lending to businesses. 

The ECB has faced criticism for proposals that would force the eurozone’s banks to set aside funds to cover 100 percent of their newly classified non-performing unsecured debt in two years at most and seven years to cover all secured bad debt.

“We see Italian banks becoming increasingly less keen to lend to domestic corporations,” S&P said in a report looking at the effects of the ECB’s proposal. [Reuters]

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