FRANKFURT — The European Central Bank will ask euro zone banks from next year to set aside more cash to cover newly classified bad loans and may also present additional measures to tackle the sector's huge stock of bad debt, it said on Wednesday. Soured loans are clogging up bank balance sheets and holding back lending, a headache for the ECB as weak credit growth offsets some of the stimulus it is trying to provide through low interest rates. Starting Jan. 1, banks will have at most two years to set aside funds to cover 100 percent of their newly classified non-performing unsecured debt and seven years to cover all secured bad debt, it said in a new proposal, confirming an earlier Reuters report. "In addition, by the end of the first quarter of 2018, ECB Banking Supervision will present its consideration of further policies to address the existing stock of NPLs (non-performing loans), including appropriate transitional arrangements," it said in a statement. Advertisement Continue reading the main storyBanks are sitting on nearly 1 trillion euros worth of bad loans, partly a legacy of Europe's debt crisis, with lenders in places like Italy, Greece, Spain and Cyprus suffering the most.

Source: New York Times October 04, 2017 07:18 UTC