Italy Economy Minister says tackling bad loans too quickly would hurt banks

DAVOS, Switzerland (Reuters) – Italian Economy Minister Pier Carlo Padoan said on Thursday he hoped the European Central Bank would not ask banks to tackle their existing bad loans too quickly, as such a move would be counterproductive.

“If this is done too quickly, if this is done too aggressively, this will be counterproductive and will make banks not more healthy but less healthy,” Padoan told Reuters at the World Economic Forum in Davos, Switzerland.

The ECB aims to publish by March a draft of new measures targeting a huge pile of unpaid loans weighing down euro zone banks and causing particular headaches in Italy, home to a quarter of the currency bloc’s soured debt. [nL8N1PI5AS]

Padoan said he hoped the regulator’s next moves will take into account “the impact on market climate, so that there is no counterproductive reaction from the market side”.

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