European Parliament leader says ECB chief has no power to set rules on NPLs

NICOSIA, Dec. 8 (Xinhua) -- European Parliament President Antonio Tajani said on Friday that he has told European Central Bank (ECB) governor Mario Draghi that it is not up to him to decide new rules in relation to non-performing loans.

Tajani told the Cypriot parliament during a visit to the eastern Mediterranean island that setting rules on impaired loans is within the powers vested in the European Parliament.

"I wish to recall that it is not the job of a technocrat, no matter how high his position is, to impose rules on the ECB on the interests of citizens, the access of citizens or businesses to credit," Tajani added.

He said that that he addressed a letter to Mario Draghi on Oct. 9 telling him that "it is not up to the Central Bank to decide new rules regarding NPLs".

"If rules should be in place for non-performing loans it should be to the legislator to adopt them," Tajani said.

Tajani further said that "the validity of my view" has already been confirmed by the independent legal service of the European Parliament.

He said that he told Draghi that discussing the content of rules on non-performing loans is not his responsibility, as this is within the area of responsibility of the representatives of the people.

Rules on dealing with non-performing loans is of paramount interest to Cyprus as impaired loans are the biggest single problem facing the island following its rescue from bankruptcy in 2013 and the resolution of the banking system.

A statement by the Central Bank of Cyprus (CBC) on Friday said that non-performing loans in all banks stood at 20.62 billion euros (24.25 billion U.S. dollars) at the end of the second quarter this year, down by 4.9 billion euros since the end of last December.

CBC said the downward trend was due to an increased restructuring and loan write-offs in the context of restructuring during the six-month period to the end of June.

Total restructured facilities at end-June 2017 amounted to 12.8 billion euros, but about 8 billion euros continue to be classified as non-performing loans as a result of a European Central Bank rule that sets a 12-month delay in listing restructured loans as actually restructured.

This rule adds an additional burden on the banks which have to make provisions for the whole of loans listed as non-performing. Enditem