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[FRANKFURT] Eurozone banks will be able to choose how fast they want to work off their bad loans under new guidelines due to be published shortly by the European Central Bank, the ECB's chief supervisor said on Wednesday.
Banks and investors had feared the ECB might force a fire-sale of soured credit, a legacy of the eurozone's debt crisis that is holding back fresh lending, when it publishes new recommendations on the matter later this year.
But Daniele Nouy's remarks on Wednesday suggested this process would not start for several months and bankers would still be given discretion about how quickly they want to tackle the problem.
"It's also the decision of the bankers to decide whether they want to move faster ... or whether they prefer to address that more gradually, but they will have to carry them for a longer period of time," Ms Nouy said at an event in Paris.
She added the ECB would talk to banks individually, suggesting the supervisor would be open to taking a tailored approach for each bank, rather than a one-size-fits-all.
High piles of bad loans have been a problem in crisis-struck countries such as Greece, Italy and - and the ECB, the eurozone's top banking supervisor, has made tackling the issue one of its priorities for this year.
The Italian government recently launched a fund, called Atlante in Italian, to buy non-performing loans and recapitalise weak banks.
Ms Nouy said the ECB is close to publishing a report on non-performing loans and banks will have the chance to give feedback on it before it becomes part of the ECB's supervisory guidance.
"There will be a consultation anyway on anything that is decided ...(which) couldn't be less than two months," Ms Nouy said. "We will integrate outcome of the consultation so it takes time before it is guidance."