The President of the European Parliament, Antonio Tajani, and Italian finance minister Pier Carlo Padoan have expressed concerns about the European Central Bank's new draft guidance to banks on nonperforming loans, according to media reports.
In a letter to ECB Chairman Mario Draghi, Tajani wrote: "I seriously wonder whether specific additional obligations ... can be imposed on supervised entities without appropriately involving the co-legislators in the decision-making process."
Earlier, Padoan had also expressed "doubts" about the ECB's new draft policy on NPLs, the Financial Times reported Oct. 9.
"I have doubts about the method and about the substance of the communication by the Single Supervisory Mechanism," Padoan said ahead of a meeting of eurozone finance ministers.
Though nonbinding, banks will be required to report deviations from its proposed addendum and compliance annually, according to the ECB.
However, the concerns voiced by Tajani and Padoan highlight the problem of the high volume of NPLs on the loan books of Italian lenders, which make it difficult for them to comply with the new guidance.
The ECB also ignored suggestions made by the council of EU member states in drafting the new policy, FT reported, citing a senior Italian official.