FRANKFURT (Reuters) - The euro zone's top banks shed some 30 billion euros (26 billion pounds) worth of unpaid loans in the three months to September, in a new sign that European Central Bank pressure to clean up their balance sheets is bearing fruit.
The ECB wants banks to sell or provision for the bad debt they've inherited from the last recession so they can focus on extending fresh credit and are better prepared to withstand any new downturn.
ECB data showed non-performing loans and advances held by the euro zone's 107 top banks fell to 627.7 billion euros, or 4.17 percent of the total, in the third quarter of last year.
That was down from 657.15 billion euro, or 4.40 percent of the total, and the end of the second quarter.
Large falls were seen in Cyprus, Italy, Greece, Portugal and Spain, and also in Germany.
Soured credit inherited from the last recession still accounted for a fifth of the loan book of Cypriot banks and for 40 percent of bank credit in Greece.
The ECB has handed out deadlines to euro zone banks for setting cash aside to cover all of their soured credit, sources told Reuters this month.
(Reporting by Francesco Canepa; editing by Jason Neely)