France Pushing to Relax Bad-Loan Rules to Help Banks in Turmoil

France is pushing regulators to go easy on banks whose customers face difficulties repaying loans after the coronavirus outbreak curbed economic activity and disrupted markets.

Authorities should relax rules on the classification of nonperforming exposures so that banks get more flexibility in dealing with struggling businesses, according to French Finance Minster Bruno Le Maire. Companies need continued access to credit to “avoid a spiral” after the market turmoil caused by the spreading disease and collapse in oil prices, he said.

As things stand, banks need to classify a loan as nonperforming when the borrower fails to pay back agreed ...