Bank Supervision

ECB could crack down on sour-loan lenders

The trick is sorting the good from the bad. Source: DPA

The European Central Bank could crack down on the euro zone’s huge stock of unpaid loans if it is not satisfied with banks’ own plans to deal with the matter, a top ECB supervisor said.

“That depends on how successful banks are with their reduction of NPLs,” said Ignazio Angeloni, an ECB supervisory board member, in an interview with Handelsblatt. “We are currently carrying out a rigorous assessment of banks’ plans. In some instances, we will be calling for more effort, more energy and more action.” For banks that are deemed to be failing in addressing this issue properly, “we will have to make our expectations clear,” Mr. Angeloni added.

The ECB’s bank supervision hasn’t yet decided whether its guidelines for new non-performing loans, or NPLs, will extend to existing ones, Mr. Angeloni said. It’s still possible that banks’ own steps to reduce outstanding bad loans will suffice for the regulators, he added.

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