The European Central Bank's oversight arm has chosen the Central Bank's head of banking regulation, Sharon Donnery, to lead a charge on tackling bad loans in the euro zone, reports Bloomberg. 

Sharon Donnery is director of credit institutions at the Central Bank.

She will lead a working group on resolving loans in partial or full default across euro-region banks, Daniele Nouy, chair of the ECB supervisory board, said. 

An average 12% of loans across 123 lenders under direct ECB supervision are non performing, Nouy said earlier this month. 

The working group aims "to implement at SSM level the good work done in the Irish system" to reduce its amount of loans in default, Nouy said, referring to the Single Supervisory Mechanism, as the ECB's oversight arm is known. 

She did not give a target for the reduction, according to the financial news agency.

Irish banks, in  the epicentre of the European banking crisis following a property crash in 2008, were set quarterly targets in 2013 to restructure troubled mortgage and business loans or face provisioning and capital penalties. 

Defaulted loans at Bank of Ireland fell 27% in the two years to June, according to company filings. 

Non-performing loans at AIB have declined 38% over the same time But some 25% of AIB's loans remained impaired at the end of June, according to its interim report. 

The country's banks, which cost taxpayers a gross €64 billion to rescue during the financial crisis, returned to underlying profit last year for the first time since 2008, partly as loan-loss charges decreased.