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Italy vows 'battle' over ECB proposals for bad loans crackdown
October 9, 2017 / 4:26 PM / 13 days ago

Italy vows 'battle' over ECB proposals for bad loans crackdown

ROME (Reuters) - Italian Industry Minister Carlo Calenda said on Monday Italy would fight new proposals by the European Central Bank to force banks in the euro zone to set aside more cash to cover bad loans.

FILE PHOTO: Italian Industry Minister Carlo Calenda poses during an interview with Reuters in his office in Rome, Italy November 25, 2016. REUTERS/Tony Gentile/File Photo

“We will fight this in the European Union, it’s a political, not a technical matter,” Calenda said in a television interview to be broadcast later on Monday.

Calenda is the latest of several Italian politicians to react angrily to the ECB’s proposals last week to force banks from 2018 to set aside more cash against newly classified bad loans.

Italian banks have been hit by concerns the ECB may extend the new rules also to the bloc’s huge stock of bad debts, of which they hold nearly 30 percent. ECB’s Executive Board Member Yves Mersch said on Monday a solution had to be found to deal with existing bad loans now that an accord had been reached over how to treat new ones.

Calenda said if the ECB’s proposals were adopted Italy would risk a credit crunch that would hurt its small and medium sized companies particularly hard.

Reporting by Giuseppe Fonte, writing by Gavin Jones, editing by Valentina Za

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