ROME, June 25 (Reuters) - The Italian cabinet convened on Sunday afternoon to approve an emergency decree that will start liquidation proceedings for two ailing Veneto-based lenders, Banca Popolare di Vicenza and Veneto Banca, the prime minister's office said.
The decree must be approved by midnight on Sunday, in time for the reopening of bank branches and markets on Monday.
The European Commission on Friday gave preliminary approval for the Italian plan to wind down the two banks with state money in a move that may allow Rome to solve its latest banking crisis on its own terms.
The decree is expected to split the two lenders' assets into "good" and "bad" banks. The country's top retail bank Intesa Sanpaolo is set to buy the good assets for one euro, leaving the state to foot the bulk of the bill for losses stemming from the banks' bad loans, legal risks and restructuring costs.
Reporting by Silvia Aloisi