The European Central Bank is considering shelving planned rules that would have forced banks to set aside more money against their stock of unpaid loans, after suffering a political backlash.
The guidelines, which were expected by March, had been presented as a key plank of the ECB’s plan to bring down a 759-billion-euro pile of soured credit weighing on eurozone banks, particularly in Greece, Portugal and Italy.
The Frankfurt-headquartered institution is now considering whether further policies on legacy nonperforming loans are necessary “depending on the progress made by individual banks,” a spokeswoman for the central bank said.
She added that no decision had been made yet and the next steps were still being evaluated. European Central Bank sources told Reuters that if the rules are scrapped, supervisors will look to continue putting pressure on problem banks using existing powers. [Reuters]