ECB asks banks to set aside more cash for bad debt amid €1tn problem

Central bank attempts to prevent creation of new eurozone debt pile by making it more expensive to hold problem loans

The European Central Bank is attempting to put a lid on the near a1tn (886bn) of bad debts stored in eurozone banks by asking lenders to be more prudent about the way they handle new customers falling behind on repayments.

The Frankfurt-based institution issued guidance on Wednesday intended to stop a new pile of problem debts being built up inside eurozone banks by setting out how much cash it wanted lenders to set aside for bad debts incurred from January 2018.

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