FRANKFURT (Reuters) - The European Central Bank can accept securities backed by non-performing loans (NPL) as collateral from banks, provided that they have a credit rating above a certain threshold, the central bank's president said on Monday.
Mario Draghi dismissed the prospect, raised by the Italian Treasury, that the ECB could buy asset-backed securities (ABS) based on bad loans as part of its quantitative easing programme.
"We're not talking about buying anything, the question is whether the NPLs in a specific ABS format could be accepted as collateral," Draghi said.
"The ABS will have to have a minimum second-best rating of single A. Therefore, the inclusion of NPLs in the pool of underlying assets does not preclude these ABSs ... from collateral eligibility."