EU bail-in rules 'risky for economy'

Would 'quadruplicate' costs to taxpayers

(ANSA) - Rome, February 19 - New European Union rules on bank bail-ins put the economy at risk and are an obstacle to Italy's growth, the Confindustria industrialists association research center (CSC) said Friday.
    "Some banking rules recently adopted in Europe and others that are being debated - all theoretically aimed at strengthening the banking system and reducing risks to the economy - are actually counterproductive," the CSC report said.
    "Not only for peripheral countries...but also for the core countries that inspired those rules". "Placing limits on bank purchases of government bonds would increase credit costs and fails to break the link between banking debt and sovereign debt," the CSC added. The report said banking systems remain national insofar as government bond yields guide medium-to-long term rates. Placing limits on bond buys would cause a credit crunch, the report said. As well, new EU bail-in rules that say shareholders, bondholders and clients with accounts of over 100,000 euros must take losses if the bank fails "quadruplicate the costs for taxpayers".
    As far as toxic loans are concerned, the CSC blamed "a long and deep recession" over recklessness on the part of lenders.
    Measures to immediately free bank balances from non-performing loans are "essential to relaunching credit and the economy, but some measures are being stymied by the new EU rules," the CSC said.
    "State guarantees at market prices do not solve the problem," the report said.
    The CSC called for more vehicle companies in which to transfer the bad loans, spreading losses over several fiscal years, and speeding up enforcement of collateral.