Luis de Guindos rejects that the ECB is currently considering creating a bad European bank
Luis de Guindos He has assured that the ECB is not evaluating right now the creation of a bad bank at European level to put into it the assets in default that are generated by the crisis of the coronavirus. As the vice president of the European Central Bank, “We have not had any serious discussion about this type of instrument,” said the Spanish during a video conference on finance organized by the International Institute of European Affairs (IIEA for its acronym in English), based in Dublin.
The vice president recalled that in 2012 a ‘bad bank’ had already been created in Spain, in reference to the creation in 2012 of the Asset Management Company from Bank Restructuring (Sareb).
“When I was Minister of Economy in Spain, as well as here in Ireland, malos bad banks’ have been created and it is a powerful instrument to clean bank balance sheets. But we have not had any type of discussion at European level in the ECB, “he pointed out.
According to knowledgeable sources consulted by Reuters, the ECB has created a working group to examine the idea of a “bad bank” in order to absorb unpaid debt in the eurozone, and the work on this would have accelerated in recent weeks.
The president of the ECB supervisory board, Andrea Enria, pointed out that it is still a “very premature” issue
In this sense, the president of the Supervisory Board of the European Central Bank, Andrea Enria, one of the strongest supporters of the idea of creating a European ‘bad bank’ since his time as president of the European Banking Authority (EBA), returned to point out on Tuesday his support for this kind of instrument, although he stated that it is a “very premature” issue.
“As I have mentioned in the past, I am very much in favor of asset management entities, I think they are very useful tools to deal with very significant levels of toxic assets because they allow assets to be removed from banks’ balance sheet very quickly and restore capacity of the banks to fulfill their functions, but I reiterate, we are not at this point in a position to say if it will be necessary, it would be very premature to start talking about it now, “said Enria.
However, the Italian banker conceded that if the NPL increase were on a larger scale than that experienced after the sovereign debt crisis “there might be scope to consider additional measures.”