EU diplomats agreed on Wednesday to soften draft rules on the money banks should set aside to cover potential losses on new loans, in a move aimed at helping countries such as Italy that have huge piles of bad debt. A decade on from the 2008 financial crisis, bad loans are still curbing many eurozone banks’ ability to lend and so support economic growth. Their shares have dropped more than 20% in 2018 amid signs the global economy is cooling, with Italian banks down more than 25% as a Eurosceptic government took office in Rome in June. The deal agreed on Wednesday unexpectedly softens legislative changes proposed in March by the executive European Commission, but it still needs approval of the EU parliament. Under the proposal outlined in an EU statement, banks will have more time to set aside money to cover potential losses from new loans. States backed extending to three years, from two, the time that banks have to build a backstop that would cover new unsecured, riskier loans tha...
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