European Union lawmakers backed new rules today that would soften requirements on the money that banks must set aside to cover potential losses from new debt that turns sour, Reuters reported. The changes adopted by lawmakers in the economic affairs committee of the European Parliament will need approval from EU governments before they become law. They represent an easing of the requirements from a deal reached in October by EU governments, which in turn had softened an earlier European Commission proposal, and met with opposition in some quarters for being too lenient. In line with the compromise struck by EU states, parliamentarians backed a text that would require banks to fully provide for unsecured loans three years after they turn bad. The commission had proposed a two-year term. The date for the new requirements to enter into force will not be backdated to March 2018 as had been proposed by the commission, the text agreed by lawmakers said, in line with the compromise reached by EU states in October.
