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European Banks With Bad Loans May Get Help From the EU

Alexander Weber and Silla Brush, (2018), «European Banks With Bad Loans May Get Help From the EU»Bloomberg, 27 Νοεμβρίου

Banks from Greece to Italy that are struggling to get rid of a mountain of bad loans may soon get some help from European Union lawmakers.

A bill that’s nearing the finish line in Brussels would soften the capital hit banks usually face when they sell non-performing loans at a loss. That could give a boost to Italian lenders, which are sitting on the EU’s biggest pile of soured debt — 174 billion euros ($196 billion) — that’s often difficult to unload.

“This should make it easier for banks to clean up their balance sheets from bad assets without unduly impairing their lending capacity,” according to a Nov. 27 document seen by Bloomberg. The document lays out out a proposed compromise on the legislation reached by officials from the European Parliament and the Austrian government, which is leading work on the bill on behalf of the EU’s 28 member states.

The proposal is the latest sign that EU policy makers are easing new capital and liquidity rules in response to pleas from the bloc’s banks, which are struggling to boost profits after a long period of low interest rates and stiff competition from foreign rivals. The new treatment of “massive disposals” of bad loans is part of a broad overhaul of EU banking laws that has been grinding along for two years.

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