cloudy
Tuesday September 25th, 2018 1:06PM

ECB taking action to reduce bad loans at eurozone banks

By The Associated Press

FRANKFURT, Germany (AP) — The European Central Bank said Wednesday it is taking further steps to address the problem of bad loans burdening bank finances and clogging the flow of credit to the economy.

The ECB said it would set expectations for each financial institution on putting aside adequate cash reserves to cover business loans that aren't likely to be repaid on time or in full.

Soured loans have been a problem in Europe as they have hindered economic growth and complicated the political efforts to strengthen the setup of the euro.

Banks with large amounts of bad loans are less likely to make new loans, cutting off credit to businesses and restraining growth. Lingering piles of bad loans — most notably in Italy — have also provided ammunition to opponents of deposit insurance at the European Union level. Such deposit insurance would make the eurozone financial system more resistant to panics. But German officials have resisted the proposal, saying risks of bank trouble must first be removed from the system.

The new measure covers banks' pre-existing loans; new loans were addressed by new financial reserve requirements in March. Banks would be expected to bring their coverage of pre-existing bad loans into line with set-asides covering new ones, but without a fixed timeline.

The ECB said banks would be expected to comply over "the medium term," without providing more detail, and their requirements would take into account levels of bad loans at other "comparable" financial institutions.

The ECB said Europe's new system of banking regulation, in which supervision of the most significant banks was transferred to the ECB from national regulators, had already reduced bad loans from 8 percent of outstanding loans in 2014 to 4.9 percent last year.

Nevertheless, the ECB said that the current level of bad loans "remains far too high compared to international standards."

  • Associated Categories: Associated Press (AP), AP World News, AP Business, AP Business - Economy, AP Business - Industries, AP Business - Financial Services
© Copyright 2018 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
ECB taking action to reduce bad loans at eurozone banks
The European Central Bank says it's taking further steps to reduce the amount of bad loans carried by banks _ a factor that hindered economic recovery and complicated debate on strengthening the setup of the euro
1:24PM ( 4 minutes ago )
The Latest: May says Trump-Putin talks could reduce tensions
The Latest: UK prime minister says Trump-Putin meeting could reduce tensions
1:21PM ( 7 minutes ago )
Trump will get red carpet treatment in UK _ and big protests
President Donald Trump will get the red carpet treatment on his brief visit to Britain beginning Thursday: Military bands, lunch with the prime minister, then tea with the queen at Windsor Castle before flying off to one of his golf clubs in Scotland
1:16PM ( 11 minutes ago )
Associated Press (AP)
Trump claims Germany 'controlled' by Russia, Merkel differs
President Donald Trump is claiming a pipeline project has made Germany "totally controlled" by and "captive to Russia" during a combative breakfast that kicked off what was already expected to be a fraught NATO summit
12:53PM ( 34 minutes ago )
The Latest: NATO invites Macedonia to start membership talks
The Latest: NATO invites Macedonia to start membership talks
12:32PM ( 56 minutes ago )
Stocks drop as trade war heats up with new tariff threats
Global stocks are lower after the U.S. threatened to put import taxes on $200 billion in exports from China and Beijing said it will retaliate
12:23PM ( 1 hour ago )
AP Business
China vows retaliation for $200 billion US tariff threat
China's government has vowed to take 'firm and forceful measures' against US threats to expand tariff hikes to a new range of goods including fish sticks and French doors
9:26AM ( 4 hours ago )
BMW says no change in South Carolina expansion plans
BMW says it will continue plans to add 1,000 jobs in South Carolina, even though the company will start production of a new vehicle in China
9:06AM ( 4 hours ago )
World markets tumble as US, China intensify their trade war
Global stocks are sharply lower after Beijing hit back at U.S. plans for tariffs on $200 billion more Chinese exports
8:08AM ( 5 hours ago )
AP Business - Economy
The Latest: Hatch disagrees with Trump on Russia-Germany
Utah Republican Sen. Orrin Hatch says he disagrees with President Donald Trump's assertion that Germany is "totally controlled" and "captive to Russia."
11:04AM ( 2 hours ago )
The Latest: Macron disagrees with Trump on Russia-Germany
President Donald Trump and German Chancellor Angela Merkel have met after the U.S. leader publicly lambasted the longtime ally over its spending on national defense and a Russian oil pipeline
10:50AM ( 2 hours ago )
The Latest: Trump: Relations with Germany are 'tremendous'
President Donald Trump and German Chancellor Angela Merkel have met after the U.S. leader publicly lambasted the longtime ally over its spending on national defense and a Russian oil pipeline
10:05AM ( 3 hours ago )
AP Business - Industries
The Latest: Dem: New swipe at 'Obamacare' shows court stakes
Senate Democratic leader Chuck Schumer says a weekend move by the Trump administration to undercut the Affordable Care Act is another reason for senators to closely scrutinize the president's Supreme Court nominee
3:31PM ( 1 day ago )
ECB head Draghi: Trade protectionism is main risk to economy
European Central Bank head Mario Draghi said that rising trade barriers are the main threat to Europe's economy and that it's up to the European Union to "lead by example."
10:32AM ( 2 days ago )
Trump administration takes another swipe at 'Obamacare'
Trump administration says it's freezing payments under an "Obamacare" program that protects insurers with sicker patients from financial losses
7:21AM ( 3 days ago )
AP Business - Financial Services
The Latest: May says Trump-Putin talks could reduce tensions
The Latest: UK prime minister says Trump-Putin meeting could reduce tensions
1:21PM ( 7 minutes ago )
Trump will get red carpet treatment in UK _ and big protests
President Donald Trump will get the red carpet treatment on his brief visit to Britain beginning Thursday: Military bands, lunch with the prime minister, then tea with the queen at Windsor Castle before flying off to one of his golf clubs in Scotland
1:16PM ( 12 minutes ago )
Appeals court hears challenge to Texas campus carry law
Attorneys for three University of Texas professors asked a federal appeals court Wednesday to revive their lawsuit against a law allowing people with concealed-handgun licenses to carry weapons on public campuses
1:09PM ( 19 minutes ago )
The Latest: Croatia makes 1 lineup change for semifinals
Croatia coach Zlatko Dalic has selected midfielder Marcelo Brozovic to replace forward Andrej Kramaric in the only change to his starting lineup for the World Cup semifinal against England
1:06PM ( 21 minutes ago )
Firefighter killed in gas explosion, fire near Madison
Authorities say a firefighter was killed and at least a dozen other people were injured when a natural gas explosion leveled at least two buildings in a Wisconsin community
1:03PM ( 25 minutes ago )