October 10, 2017 / 6:11 AM / a year ago

EU parliament head raps Draghi over bad loan guidelines

MILAN, Oct 10 (Reuters) - The European Central Bank must involve the European Parliament in the decision-making process about new guidelines for bank bad loans, the head of the parliament told ECB President Mario Draghi in a letter published by the Italian press on Tuesday.

The ECB last week issued new proposals that will force banks from 2018 to set aside more cash against newly classified bad loans and, early next year, could revise recent guidelines for the reduction of the soured debt stock.

Italy - whose banks hold nearly 30 percent of the bloc’s 915 billion euro bad loans - has reacted angrily to the proposals, asking the ECB to soften them following a public consultation that runs until Dec. 8.

European Parliament president Antonio Tajani, an Italian national, told Draghi he was “deeply concerned” about how the new bad loan initiative was being undertaken.

“I seriously wonder whether specific additional obligations...can be imposed on supervised entities without appropriately involving the co-legislators in the decision-making process,” Tajani was quoted as saying in the letter.

“I would urge you to take all steps in order to ensure that parliament’s prerogatives as co-legislator are duly respected, so as to avoid an inter-institutional dispute about this issue.”

Reporting by Silvia Aloisi

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