In a consultation document published on Friday, the Commission sided with the European Parliament, by underlining that the ECB could only force specific banks to set aside more money against non-performing loans (NPLs).

“Binding measures and requirements can only be applied by the supervisor on a case-by-case basis depending on the individual circumstances of the bank,” the Commission said.

The document confirmed earlier statements by the commission’s vice president, Valdis Dombrovskis, but is at odds with the position taken by Economics Commissioner Pierre Moscovici on Monday (6 November).

She said new rules on loans that go bad could be improved and delayed, but she defended the guidelines.

In the document, the commission consulted bankers and other interested parties on new legislative measures planned by March to avoid any future build-up of NPLs.

Bad loans during the eurozone’s decade-long financial crisis reached €1 trillion ($1.1 trillion), making it harder for banks to lend to companies and households. They have now decreased to nearly €850 billion, according to the ECB, but still weigh on banks, especially in southern Europe.

The commission clarified that its planned stricter rules should apply only to loans made after a cut-off date that needed to be decided. That contrasts with the ECB’s plan to also apply the new requirements to old loans that turn bad after January.

The ECB draft guidelines give eurozone banks seven years from January to provide for credit backed by collateral and two years for unsecured debt.

The commission’s consultation document refers to two years for unsecured loans, and six to eight years for secured debt.

But after earlier criticism from banking lobbies, Nouy signaled that rules on legacy NPLs would be applied only bank-by-bank, ruling out sector-wide guidelines.

($1 = €0.8574)