ECB urges EU-level effort to tackle 1 tln euros of bad loans

The European Central Bank (ECB) on Friday urged efforts at the European Union (EU) level to address nearly 1 trillion euros (1.08 trillion U.S. dollars) in bad loans generated in the wake of the 2008 financial crisis.

A "comprehensive, coordinated effort" from the EU and its member states is crucially needed, ECB Vice President Vitor Constancio told an event organized by Brussels-based think tank Bruegel.

Non-performing loans (NPLs) have posed a severe problem for Europe as banks directly supervised by the ECB still held 921 billion euros of such troubled loans at the end of September 2016, representing 6.4 percent of total loans and equivalent to nearly 9 percent of eurozone GDP, said Constancio.

Currently, the ratio of bad loans still stand at double digits in the single currency bloc's six countries including Cyprus, Greece, Italy, Ireland, Portugal and Slovenia.

The vice president called for comprehensive strategies to address the problem, saying EU-wide efforts and support from member states were needed.

"An AMC (asset-management company) at European level would be a welcome initiative," he said." A true European AMC, however, faces difficulties in the present environment. In more immediate terms, a way forward could be the creation of a European blueprint for AMCs to be used at national level."

He said this European blueprint should clarify what was possible within a flexible approach to the existent regulation and encourage countries to adopt all necessary measures in a well-defined time frame.

Meanwhile, a European NPL-information platform should be implemented to enhance transparency and facilitate transactions, he added.

"A great deal of hard work is clearly needed. Neither a partial solution nor further waiting is an option," Constancio warned. Enditem