Italy drawing up ‘bad bank’ plan: report

Italy is working on creating a state-backed "bad bank" to help Italian lenders shed non-performing loans, the country's Il Messaggero daily said on Wednesday.

Italy drawing up 'bad bank' plan: report
Banca Popolare di Milano was one of nine Italians banks to flunk the European Central Bank's health test last year. Photo: Giuseppe Cacace/AFP

The project, which is being drawn up by the government, the Bank of Italy and the Treasury, aims "to favour the sale by certain banks of a significant part of their non-performing loans", which totalled €181 billion in November.

The plan, dubbed "New Credit for Growth", would see the state take a minority 49-percent stake in the bad bank, or a majority stake of 81 percent, according to documents cited by the daily.

The Bank of Italy and private investors would be among the shareholders of the bad bank, which would have capital of around €3.0 billion, it said.    

Nine Italian banks flunked the European Central Bank's health test last year, including Banca Monte des Paschi and Banca Popolare di Milano.

READ MORE: Nine Italian banks fail European stress test

Photo by Giuseppe Cacace/AFP

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