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Italy taking measures to deal with bad debt

Italy taking measures to deal with bad debt

(25 January 2016 – Italy) Italian Finance Minister, Pier Carlo Padoan said last Friday that the country will adopt measures to help its banks deal with a mountain of bad loans.

The measures would be along the lines of policies the government has already put in place, Padoan said at the World Economic Forum in Davos, according to his spokesman.

The Italian government is in discussions with the European Commission to allow buyers of banks’ bad loans to purchase a state guarantee on them to reduce the price gap, a source said. Under the terms being reviewed, the loans would not be bundled into a common pool backed by the state, said the person, as was previously envisaged.

Padoan said the government is conducting a “very good conversation” with the European Commission on the plan, with additional national measures to ease the sale of non-performing loans to be introduced over the week ahead.

“We are working on a guarantee scheme which is part of a strategy” Padoan said in an interview at the World Economic Forum in Davos, Switzerland.

“I believe there are a lot of opportunities out there and we are seeing encouraging signs not just in Monte Paschi but in other banks to raise capital, to strengthen, to look at possible M&A,” Padoan said. “But this is market business, it’s not my business to interfere with.”

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