March 9, 2020 / 1:44 PM / 20 days ago

France pushes for flexibility from bank regulators over outbreak - sources

PARIS, March 9 (Reuters) - France wants European banking regulators to show flexibility towards firms falling behind on their debt payments due to the coronavirus outbreak, two French finance ministry officials said on Monday.

A third finance ministry official said the ministry wants upcoming European bank stress tests to be postponed in response to the outbreak.

On debt repayments, one of the two officials said some euro zone finance ministers were pushing European bank supervisors to give firms struggling to meet debt payments more time before their loans are classified as non-performing.

Banks are currently required to hold more capital against loans of firms that are in arrears for more than 90 days and are thus more reluctant to lend to such firms.

Extending the limit beyond that would take pressure off banks and allow them to keep lending to firms in need of credit, the official said.

The second of the two officials said there was strong demand from companies for a longer period before being qualified as non-performing.

On the stress tests, the third official said the macroeconomic scenario that European bank supervisors were going to use for the tests no longer reflected economic reality since the outbreak.

“It doesn’t seem appropriate today to go ahead with stress tests,” the official said.

French Finance Minister Bruno Le Maire told journalists at a news conference that all banking authorities, including those at the European level, had to show flexibility in the face of the outbreak.

“If we want banks to step up and give firms having cashflow problems more time, then at the European level we can’t make them book certain things that could make market conditions even worse,” Le Maire said. (Reporting by Gwenaelle Barzic and Leigh Thomas; Editing by Christian Lowe)

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