The EU has agreed to ailing financial institutions facilitate the removal of bad loans. The banking supervision of the European Central Bank (ECB) has sharply criticized. “The banks have always been conservative, to be punished. The banks pushed bad loans in the balance sheet, will be rewarded,” said ECB Director General Korbinian Ibel.

The new law stipulates that banks are in a transitional period of several years for their losses from the sale of bad loans hardly any capital, and the negative not in the risk models of the Bank must be included. Ibel not referred to this change as “dangerous”, if the Bank change their lax Lending practices after removal of the Contaminated sites, and just continue to do that. Then bad loans accumulated in the next economic hole, for which the concerned Bank’s rules as a result of the new EU exception to little provisions have formed, fears Ibel. “This new zombie banks could arise and endanger the financial system.”

non-Performing loans in value of over 700 billion euros

The chief of the important section Department under the dash with his Expressions of criticism of the outgoing Head of the ECB banking supervision, Danièle Nouy, in the summer, in a letter to the three European institutions warned that the proposed scheme would be the discipline of banks ‘ risk management undermine.

Bad financial crises are often a result of excessive lending in good times. But as soon as the economy collapses, more and more borrowers are your agreed interest and repayment instalments do not have to pay more. The loans are non-performing, which can endanger the solvency of banks. In the European banking sector, ten years of lying dormant after the global financial crisis, non-performing loans in value of over 700 billion euros. Particularly institutions in Italy, Greece, Cyprus and Portugal are affected. In these countries, many borrowers – households and companies – their repayment is not more rates of pay. The Bank will move, therefore, losses in front of it, which makes it difficult to the new credit.

“The main problem in the Italian banking sector is the medium-sized banks.”Sven Giegold, MEP of the Greens

The governing Plan provides that the affected banks lace up distressed loans packages and special investors to sell, in order to relieve their own balance sheets. The banks do not receive on the sale of the full price of the loan. The old rules stipulated that banks had to make in these cases, additional loss buffer for the in the balance sheet of the remaining bad loans. The Institute, according to the proponents of the new rule, my were inclined because of this disadvantage, to cancel the sale of the loan portfolio. The ECB’s Bank supervision does not share this fear.

Specifically, the new provision, the Bank for three years from the obligation to indemnify, “to take into account losses from massive sales of bad loans in the calculation of capital requirements through internal models”. This provision, however, is only a small part of a large legislative package that makes banks in many areas, more stringent regulations.

Sven Giegold, member of the European Parliament of the Greens, sees the issue of Contaminated sites is yet another issue. “The ECB puts pressure on the large Italian banks to sell the bad loans, but the main problem in the Italian banking sector is the medium-sized banks not supervised directly,” says Giegold. Here, the ECB could pull the Supervisory responsibility in itself and a solution to the bad loan books. “But you don’t dare. The Problem has been brewing.” Giegold also takes the potential buyer of bad loans to the visor. “The ECB is printing, the banks make Provision for their bad loans in the portfolios, at the same time, member States to block consumer protection. When loans are sold to aggressive investors, there is the danger that these will be immediately due and payable and the borrower in a forced position,” said Giegold. The EU parliamentarians said: as Long as credit recyclers, such as Cerberus, Blackstone and Intesa Sanpaolo were not subject to any consumer protection rules that were repealed over-indebted borrowers better at your house Bank.

(editing Tamedia)

Created: 13.12.2018, 13:50 PM