A vote by European Union lawmakers to soften capital rules for banks that offload large amounts of bad loans is meeting resistance and could be ditched, officials said, in what would be a blow to Italian lenders profiting from the planned reform, Reuters reported. Under a proposal adopted by the economic affairs committee of the European Parliament last Tuesday, EU banks that carry out “massive disposals” of non-performing loans, covering at least 15 percent of all defaulted debt, would be allowed to set aside less capital against losses. The move is a “deviation from international standards” aimed at reducing banking risks, one European official told Reuters. The Parliament’s vote amended a banking overhaul proposed by the European Commission that had been endorsed by the Council of EU finance ministers in May. To become law, a final deal is needed among the three EU institutions, under trilateral talks due to begin in July.
