BRUSSELS, June 20 (Reuters) - European Union banks should reduce the stock of bad loans to a maximum of 5 percent of the loans they hold, Germany and France said in a joint document, recommending a ceiling that would force Italy and other EU countries to hasten offloading plans.
The document, adopted before an EU summit scheduled for next week in Brussels, said that all European banks should aim at reducing their gross exposure to non-performing loans (NPLs) to a maximum ratio of 5 percent.
“There should be an aim of a 5 percent gross NPLs and 2.5 percent net NPLs for all SRB (Single Resolution Board) and all other banks,” the document said. SRB banks are all large euro zone lenders. They are under the watch of the EU agency responsible for resolving ailing banks. “Competent authorities will define individual strategies for the reduction of NPL stocks for relevant banks,” the document said. (Reporting by Francesco Guarascio, Luke Baker and Jan Strupczewski)