European Central Bank inspectors have found miscalculations and shortcomings which are worth more than 10 billion euros when searching through Euro zone banks’ loan books in 2017, according to the ECB on Monday.
The bank’s annual report on its work as the top banking watchdog demonstrates some banks were found to be inadequate in the method that they identify problem loans and customers, chose when to grant credit and set aside provisions.
The ECB’s rules give banks 2 years to provide for a loan which sours if it is yet to be backed by collateral and seven if it is. This is not due to be completely imposed until 2021.
Along with this, ECB is now putting pressure on banks to sort out their balance sheets from unpaid loans inherited from the last recession, which is a problem for most countries in southern Europe as well as Ireland and Slovenia.
Along with risky derivative instruments will remain the target of ECB supervisors this year, according to President Mario Draghi.