EU Economics

Eurozone DEBT bubble to BURST: ECB asks banks to ‘set aside cash’ to cover €1TRN bad debt

EUROZONE banks have been ordered to hold billions of pounds worth of extra cash amid fears toxic loans within the block could plunge lenders into a fresh debt crisis.

ecb draghi banks bad loansGETTY

The ECB has told lenders to hold extra cash to protect against bad loans

Policymakers from the European Central Bank (ECB) will force eurozone banks to next year set aside more cash for bad loans – and also take further measures to deal with almost €trillion worth of bad debts.Soured loans have been hanging overlenders across the bloc and are a key risk to the stability of the bloc.

The problem is particularly acute among Italian lenders – with toxic debt threatening to collapse the country’s banking system over the past year.

Greece, Spain and Cyprus are also suffering from bad loans.

Policymakers at the central bank appear to have grown incresingly frustrated by bad loans, which are holding back the ECB’s efforts to boost growth across the region.

ECB president Mario Draghi has repeatedly called for action by Governments to tackle the issue.

All banks will be given up to two years from 2018 to put aside funds that cover 100 percent of their newly classified so-called non-performing unsecured debt – and seven years to cover all secured bad debt, the bank confirmed today.

Sharon Donnery, deputy governor of the Central Bank of Ireland who presented the latest plan by the ECB to tackle bad debts, said: “We want to prevent a build-up of insufficiently covered NPLs in the future.”

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I think we can safely say the EU cannot be saved.

Jane Davies
Jane Davies

Even more ‘austerity’ for those at the bottom….but of course not for the wealthy who are never expected to make any sacrifices whatsoever.

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