External pressure

4 October 2017 By Lisa Jucca Follow @LJucca

The European Central Bank wants lenders to fully provision against new bad loans within seven years. That could be painful in Italy, where repossessing collateral can take even longer. The new rules give Rome a short window to finally get its bankruptcy law into shape.

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The European Central Bank published on Oct. 4 a consultation document on new provisioning rules for banks’ non-performing loans.

Starting from Jan. 1 2018, banks will have to take full provisions against new unsecured NPLs that remain outstanding after two years, and secured bad debt outstanding after seven years.

The ECB said it will publish “additional considerations” on measures to address the existing stock of NPLs by the end of the first quarter of 2018.

Insolvency procedures in Italy take on average twice as long as in other major European countries, Bank of Italy Director General for Financial Supervision Carmelo Barbagallo said in a speech in June.

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