October 16, 2017 / 9:51 AM / 9 months ago

S&P's says Italian banks most exposed to ECB's new bad loan proposal

MILAN, Oct 16 (Reuters) - Italian banks are the most exposed to new bad loan rules proposed by the European Central Bank and may lend less to companies in response to them, credit ratings agency Standard & Poor’s said on Monday.

“We see Italian banks becoming increasingly less keen to lend to domestic corporations,” S&P’s said in a report looking at the ECB’s proposal that require bank to provision against loan losses at regular intervals.

“Overall, we think Italian banks are potentially most exposed among eurozone banks to the new proposal by the ECB because of the very long workout periods in the country.”

S&P’s forecast 100-120 billion euros in problem loan sales in Italy by 2019 but said offloading large amounts of impaired debts at current prices could force banks in Italy and Portugal to take capital strengthening measures. (Reporting by Valentina Za, editing by Francesca Landini)

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