ROME, Oct 4 (Reuters) - The Bank of Italy is confident there are alternatives to liquidation for four Italian banks rescued from bankruptcy last year if their planned sale falls through, its Director General Salvatore Rossi said on Tuesday.
A European Union deadline of Sept. 30 for the sale of the troubled banks was extended last week, but UBI Banca's move to buy three of them has not yet been approved by the European Central Bank (ECB).
Asked whether there was an alternative to liquidation if Italy failed to find a buyer by the new deadline, Rossi said: "There are possibilities and instruments to find a positive solution to this problem that do not involve liquidation".
Neither Italy nor the European Union have said when the revised deadline will expire.
Italy's economy minister said on Monday that nationalising troubled Italian banks was not necessary, as concerns mounted that a plan to rescue lender Banca Monte dei Paschi di Siena might come unstuck.
Monte dei Paschi, the biggest of Italy's troubled banks, has agreed a new turnaround plan based on a 5 billion euro ($5.6 billion) cash call and the sale of 28 billion of bad loans, but investors' appetite is in doubt as markets fret over political uncertainty and a Dec. 4 referendum.
Two previous deadlines for the sale of the four smaller lenders, which together have 950,000 clients according to the Bank of Italy, expired without a deal being struck and Rossi said they were trying to find a solution against a backdrop of difficult market conditions.
Il Messaggero newspaper reported at the weekend that the ECB had told UBI Banca that it would have to raise 600 million euros in fresh capital if it wanted to buy Banca Marche, Banca Etruria and CariChieti, but it was only prepared to raise up to 400 million euros.
Rossi said the ECB was "rightly worried that the bank or banks that eventually buy (the lenders) should be solid". ($1 = 0.8953 euros) (Reporting by Stefano Bernabei; Writing by Crispian Balmer; Editing by Alexander Smith)