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The European Central Bank - which supervises the euro zone's
biggest banks -- has proposed that banks should set aside larger
amounts of money against new bad loans.
Investors are concerned that will lead to further loan
writedowns, with Italian banks -- which ECB data shows hold
nearly 30 percent of the bloc's 915 billion euros ($1.1
trillion) of problem debt -- prominently in the firing line.
Prime Minister Paolo Gentiloni said on Thursday he would raise
the issue of bank loans with European Commission President
Jean-Claude Juncker.
"I will ...insist on the necessity of the banking union being a
tool to improve bank lending," Gentiloni told reporters at a
meeting of center-left leaders ahead of an EU summit.
"There should not be inappropriate or untimely measures that
could hamper lending and reduce the protection of savers."
Gentiloni made no direct reference to the ECB, which is
independent of the Commission and has faced criticism from Italy
over its proposal.
Euro zone countries have launched a scheme to strengthen their
banking system under a plan known as banking union.
Under the scheme, banks have a single supervisor -- the ECB's
Single Supervisory Mechanism -- and a single set of rules on
resolution if they collapse.
The missing part of the union is a pan-European system to
protect bank deposits, which Germany does not want to agree to
until euro zone banks reduce their bad loans.
(Reporting by Francesco Guarascio; writing by Philip Blenkinsop;
editing by Jan Strupczewski and John Stonestreet)
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