Council, ECB at odds over NPL plan

Author: | Published: 7 Dec 2017

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.

In October,...