ECB to use Ireland's debt handling as positive example

Central Bank deputy governor tasked with tackling soured Eurozone loans...

ECB to use Ireland's debt handling as positive example

Daniele Nouy. Picture by: Michael Probst / AP/Press Association Images

The European Central Bank (ECB) is following Ireland's lead as it attempts to manage the €1.2 trillion of bad debt across Eurozone banks.

As the ECB readies itself for the years of work it will take to remedy the problem of non-performing loans, Sabine Lautenschläger of their supervisory board said that lessons could be learned from countries like Ireland who received aid.

Lautenschläger said:

"You can see this quite clearly in the programme countries, for example, which did via the programs a lot of changes in their legal environment.

The time frame in which non-performing loans were then worked out decreased dramatically".

Daniele Nouy, who heads up the supervisory board with Lautenschläger, pointed to Ireland as a positive example:

"Ireland has done a good job with the non-performing exposures. I'm surprised by what it has achieved by the starting of this journey".

Nouy has enlisted Sharon Donnery, Deputy Governor at the Central Bank, to lead a working group on resolving loans in partial or full default.

Over half of the soured loans reside in the banks of Greece, Ireland, Italy, Portugal and Spain.

Speaking at a European Parliament hearing on Tuesday, Nouy said:

"The ECB has worked extensively with banks in 2015, and continues doing so this year, to develop individual and tailored action plans. While it will take some time to bring down bad loan stocks, good progress over the next few years can be expected".