By Huw Jones
LONDON (Reuters) - The European Union set out plans on Thursday to "reboot" a project to strengthen its capital markets that raise money for companies because Brexit may put London, the region's biggest financial centre, out of reach.
The capital markets union (CMU) initiative was launched in September 2015 to improve the way stock and bond markets raise money for growth, and offer European companies an alternative to bank loans.
The aim was to put in place the CMU's "building blocks" by 2019 - the year when Britain leaves the EU, creating a need to reduce the EU's dependence on London's huge financial resources.
It had already taken more time than expected to get parliamentary approval for what were meant to be "quick wins", such as reviving securitisation or asset-backed debt, and making it easier for companies to list - two of the 20 measures passed from an original list of 33.
The European Commission set out a further nine "priority actions" on Thursday in its "mid-term" review of the CMU.
They include more powers for the EU's securities watchdog, helping banks to offload bad loans, making it easier to sell mutual funds across Europe, and assessing the case for an EU passport for financial technology or fintech firms.
"As we face the departure of the largest EU financial centre, we are committed to stepping up our efforts to further strengthen and integrate the EU capital markets," European Commission Vice President Valdis Dombrovskis said in a statement.
"This review makes clear the scale of the challenge and we count on the support of the European Parliament and Member States to rise to it."
A big test will be how much progress Brussels can make in helping banks to offload bad loans, a problem that led this week to European authorities intervening to avoid a collapse of Spain's Banco Popular (MC:POP).
Bad loans can restrict many banks' ability to lend, but shedding them is hampered by high transaction costs.
"The Commission services will shortly launch a public consultation on potential EU action to foster these secondary markets," the EU executive said.