EXCLUSIVE: European Central Bank officials are drawing up a scheme to cope with potentially hundreds of billions of euros of unpaid loans in the wake of the coronavirus outbreak - sources by MattScuffham johnodonnell21
FILE PHOTO: The European Central Bank logo is pictured before a news conference on the outcome of the meeting of the Governing Council in Frankfurt, Germany, January 23, 2020. REUTERS/Ralph Orlowski
While the idea for a euro zone bad bank was discussed and shelved over two years ago, the ECB, under its new President Christine Lagarde, has consulted banks and EU officials about a scheme in recent weeks, one of the people said. Major European commercial banks could be called on to join forces to underpin the scheme, the second person said.
Enria said the ECB was studying how banks could cope were the crisis to worsen. He said banks had more than 600 billion euros of capital and this would probably be enough, unless there were a second wave of infections.Still, any pan-European scheme to tackle the problem of bad loans would likely face political objections from Germany, which has long resisted attempts to support banks in weaker countries for fear it could get lumbered with unpaid bills.
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