By Marc Jones and Marcin Grajewski
FRANKFURT/BRUSSELS, April 22 (Reuters) - European officials are set to approve plans on Thursday to make it easier for commercial banks to use loans on their books as collateral at the European Central Bank, a European Union spokesman told Reuters on Wednesday.
The plan is to alter the EU Collateral Directive to include credit claims -- loans made by banks to companies or other borrowers.
Banks have long been able to use credit claims as collateral at the ECB, but various legal hurdles in certain countries currently make it a painful process which has put additional pressure on banks' finances during the crisis.
But the ECB hopes that the problems will be ironed out by bringing credit claims under the umbrella of the Collateral Directive.
A spokesman for the EU Presidency held by the Czech Republic told Reuters the change was due to be approved by EU Parliamentarians on Thursday.
An EU source said the ECB originally pushed for the changes early last year after the outbreak of the financial crisis.
"They (the ECB) argued, and I think rightly, that the Collateral Directive was only limited to financial instruments at cash and not credit claims, and that ideally we should open it up to cover also credit claims as a third category."
Once the proposals have been formalised in Brussels, national authorities would have to tweak their own laws to bring the changes into force.
It could have a big impact on the amount of credit claims deposited at the ECB and should give liquidity-strapped banks in the impacted countries far more ECB eligible collateral to play with.
The ECB's annual report published on Tuesday showed that banks deposited 1.579 trillion euros' worth of collateral in 2008, just a fraction of the 11.1 trillion total of assets in circulation deemed to be eligible.
In June 2007 the ECB estimated that as much as 50 percent of credit claims were immobilised on the balance sheets of financial institutions.