The European Central Bank's long-delayed guidelines on treating new soured bank debt will go into effect on April 1, the bank said in a statement on Thursday.
Hoping to ease concerns about its original proposal, the ECB said the guidelines were non-binding expectations and would merely serve as the basis for case-by-case dialogue with banks on how they provision against bad debt.
"The result of this dialogue will be incorporated, for the first time, in the 2021 Supervisory Review and Evaluation Process," the ECB said in a statement.
According to the guidelines, banks will have two years to fully provision for soured non-secured debt while in the case of secured loans, the deadline will be seven years.