By Olly Jackson, EMEA reporter
The EU Council has called out the European Central Bank
(ECB) for not having a mandate for its plan to reduce
non-performing loans (NPLs) in European banks.
The ECB’s programme proposed that European
banks set aside more regulatory capital to cover bad loans, and
included the implementation of a two-year deadline for them to
cover the unsecured portion of NPLs. Banks would also need to
justify any deviation from the ECB’s guidance.
An EU Council official told IFLR that the ECB 'has gone
beyond the limits of its competence’. The source
added that the Council’s legal service intervened
on the subject at a meeting of its financial services committee
in November, following discussions with the eurogroup. This
contribution from the legal service carries essentially the
same message conveyed by the European Parliament's own legal
service opinion a few weeks before.