European Central Bank: No bad loans write off

Provisions against bad loans at eurozone banks are “reasonable”, the ECB’s head of supervision has said, adding a planned clean-up of lenders’ balance sheets would take into account their difficulties.

The ECB has made tackling non-performing loans, which are curbing a recovery in lending, one of its priorities for 2016 and launched a review of how banks should deal with bad debt.

Fears the eurozone’s top banking watchdog might impose higher provisions or losses on soured bank credit contributed to a slump in eurozone banking shares earlier this year, particularly in countries where the level of bad loans is higher, such as Italy.