LONDON (Reuters) – The European Union is developing plans for markets to help banks offload a “resurgence” in coronavirus-hit loans and avoid choking economic recovery, the bloc’s choice for its financial services chief said on Friday.
Known as non-performing loans or NPLs, addressing soured debts is set to become more pressing as payment “holidays” introduced by banks on mortgage and business loans when economies went into lockdown are being phased out.
In a European Parliament hearing on Friday to confirm the appointment of Mairead McGuinness as EU financial services commissioner, lawmakers expressed concerns about giving banks too much freedom to offload bad loans and put consumers at risk of home repossession.
McGuinness said there was a need for a mechanism to take bad loans off banks’ books so they keep lending.
“If we leave a build up of NPLs, they can’t do that,” McGuinness said. “If we do nothing, we