Italian business lobbies call on EU to relax credit default rules
ROME, December 28 (Reuters) – Italy’s leading banking and industry associations have urged European Union authorities to temporarily relax EU banking rules on defaults and credit provisioning to help businesses do so. in the face of the impact of the COVID-19 pandemic.
In a letter to European Commission chief Ursula von der Leyen and other senior officials, the groups called for less stringent definitions to be applied to credit defaults to end the temporary liquidity problems that are forcing companies going bankrupt.
In particular, they said the definitions of default, combining a 90-day late payment date criterion with new rules on overdue exposures and distressed restructuring, could see “a large number” of borrowers classified. in default.
“This would seriously affect their access to credit, thus hampering their prospects for recovery,” said the letter, sent by
the banking sector lobby group ABI, the main industry association Confindustria and 14 smaller business groups.
The letter echoes concerns previously expressed by Italian banks over a stricter definition of default from January, as well as so-called calendar provisioning rules, which require banks to fully write down bad loans over a number of ‘years determined.
Italy, which has suffered the highest number of COVID-19 deaths in Europe, is also facing a major economic shock with a 9% drop in GDP this year, according to government forecasts, putting the economy at risk. future of thousands of businesses.
The groups said the calendar provisioning rules encouraged more restrictive lending practices and encouraged banks to sell loans at the first signs of financial trouble rather than backing the recovery with forbearance.
He said the rules, designed as a safety net to ensure common levels of coverage for minimum losses on non-performing loans, should be temporarily changed for at least 24 months for non-performing secured and unsecured loans in order to avoid affecting the supply of credit.
He also proposed to postpone the introduction of the new, stricter definition of credit default which is expected to take effect from January and to extend the 90-day threshold for late payments to 180 days before a borrower is deemed to have defaulted. (Report by Stefano Bernabei, edited by Barbara Lewis)