March 14, 2018 / 9:03 AM / 4 days ago

EU banks watchdog says bad loan rule to have moderate capital hit

LONDON, March 14 (Reuters) - European Union proposals that would force banks to set aside more capital to help stop the build up of bad loans will only have a modest impact on overall capital requirements, the bloc’s banking watchdog said on Wednesday.

The European Banking Authority (EBA) published an opinion on EU plans for a “prudential backstop”. The plans are due to be published by the European Commission later on Wednesday.

The cumulative impact of the new rule over a seven-year horizon, seen as the maximum amount of time for banks to adjust to it, would amount to 56 basis points or 10 percent of retained earnings, EBA said.

Reporting by Huw Jones Editing by Catherine Evans

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