EU set to give more time to banks to deduct their insurance holdings

(Reuters) - EU finance ministers were due on Tuesday to agree an overhaul of banking rules, including a deal to give lenders with stakes in insurance companies another six years to deduct those holdings from their capital.

The amendment to Europe’s Capital Requirements Regulations (CRR) would extend the deadline for the deductions to Dec. 31, 2024 from the end of this year, according to a draft of the EU banking package seen by Reuters.

European authorities have been focusing on standardizing definitions of capital and increasing capital demands on banks since the financial crisis, when a number of the continent’s lenders needed bailing out by the state.

But some governments and national lobbying groups have been pushing to give their lenders more time and room to maneuver. In Italy, a change to the CRR would mean Mediobanca MDBI.MI would not immediately have to deduct its 13 percent stake in insurer Generali GASI.MI from its own capital base.

The Italian lender, however, has so far opted not to make use of the current exemption - known as the “Danish compromise” - and it is deducting 80 percent of its Generali stake. Mediobanca plans to fully deduct the holding by the end of 2018. Mediobanca has said it intends to sell a 3 percent stake in Generali, but CEO Alberto Nagel said in October the bank was under no obligation to sell part of its shareholding in the insurer and has received no offers so far.

Reporting by Stefano Bernabei, editing by Stephen Jewkes Andrew Heavens