MILAN, Nov 14 (Reuters) - The Bank of Italy will discuss how the deteriorating economic situation is affecting banks' credit quality at an annual meeting with major Italian banks next week, a source close to the central bank said on Wednesday.
The meeting, to take place on Monday, will be attended by lenders Intesa Sanpaolo, UniCredit, Banca Monte dei Paschi di Siena, Ubi Banca, Banco Popolare and Mediobanca.
Investors are watching to see if the central bank will move at some point to counteract rising bad loans at Italian banks, which have jumped to 116 billion euros($147.45 billion) from 50 billion euros in 2009.
Italy's economy has been in recession since the middle of last year. In its Financial Stability Report published on Monday, the Bank of Italy said Italian banks have increased their provisions for credit risk, but said it was still intensifying its assessment of the adequacy of provisions.
The report will provide the basis for discussions at the meeting, the source said.
Both Intesa and UniCredit have increased provisions against risky loans in the third quarter while Banca Monte Paschi was pushed into the red by further writedowns on bad loans. ($1 = 0.7867 euros) (Reporting By Jennifer Clark and Lisa Jucca; Editing by Susan Fenton)