Italy will agitate EU on theme to shed banks' dangerous loans

The European Commission associate degreed Italian Republic reached an accord on Tuesday on a theme to assist Italian banks sell a number of their two hundred billion euros (151.27 billion pounds) of dangerous loans, ending virtually a year of often-tense negotiations.

The details area unit still being finalised, Italian Economy Minister Pier Carlo Padoan told reporters once a five-hour meeting with EU competition chief Margrethe Vestager, however the theme is "a terribly helpful instrument" supported state guarantees.

The non-performing loans, that accumulated throughout a three-year recession between 2012 and 2014, hold up banks' capital and be patient new credit that would fuel a fledgling economic recovery.

Vestager additionally welcome the accord, beneath that Italian banks can move the non-performing loans, presently on their balance sheets, to separate, separately managed entities so as to securitise them: sell debt backed by these assets.

Banks can get pleasure from associate degree Italian government guarantee on the senior tranches of the securitised assets command by such entities.

The state guarantees area unit to be provided and priced at market terms thus as to not represent state aid, Vestager aforementioned.

"The Commission, with the assistance of a observance trustee... can monitor the implementation of the theme to confirm it's state aid free," the Commission aforementioned in a very statement.

Under stricter rules Europe introduced once the money crisis in a shot to protect taxpayers, state aid will be provided to associate degree sickly investor solely once investors within the bank have borne a loss.

Negotiations between Rome and Bruxelles over the dangerous loan theme have stalled for months over whether or not or not it contained a component of state aid.

Italian bank shares have suffered serious losses this year over fears that no effective approach would be found to mend the dangerous loan downside. however the country's leading lenders rebounded on Tuesday as investors play a positive outcome of the meeting between Italian Republic and therefore the EU.

Monte dei Paschi di Siena, Italy's third largest bank, has been notably exhausting hit by the uncertainty and has lost some forty three % of its value this year, over double the losses of the Italian banking sector as an entire.