Euro zone banks given nine years to cover bad loans backed by real estate

Euro zone banks with non-performing loans backed by real estate will now be given up to nine years to set aside enough capital to cover their losses.

In a change of heart, the European Central Bank (ECB) has decided to give banks more time to deal with non-performing loans that were originated after April 26. Banks with bad loans backed by property would originally have been given seven years to cover them. As well as the extension for real estate–backed loans, banks will have three years, instead of two, to set aside cash against an unsecured non-performing loan. They also will have seven years to deal with a loan that is secured by other types of collateral.

The policy U-turn, announced Aug. 22, has come after pressure from European Union officials to give banks more time to get their bad loans under control. It has also coincided with the installment of Andrea Enria as the new head of the Single Supervisory Mechanism, the body that supervises the euro zone’s big