(Adds figures on net bad loans)
MILAN, March 9 Large writedowns booked by
Italian banks in the fourth quarter of 2016 pushed net bad loans
to their lowest level in two and a half years, data showed on
Thursday, highlighting lenders' ongoing efforts to deal with the
legacy of a harsh recession.
The Bank of Italy said that, net of writedowns, bad loans
were 77.8 billion euros ($82 billion) in January from 86.8
billion euros in December. It was the lowest net value since
In gross terms, loans to insolvent borrowers stood at 197.9
billion euros in January down from 200.85 billion euros in
The annual rate of increase was 4 percent in January. If
adjusted to take into account bad loans that were sold or
securitised, the yearly increase was 12.2 percent, little
changed from the previous month.
Italian banks struggle to offload bad debts because they can
only sell at a loss given lower market prices than net book
values. Also, new strict rules on state aid to banks prevent the
Rome government from stepping in decisively to help clean up the
banking system like Spain or Ireland did during the financial
Bad debts are blamed for restricting banks' ability to lend
and, ultimately, for curbing economic growth.
The Bank of Italy said loans to companies rose 0.9 percent
in January after a 0.2 percent increase in December in adjusted
Data showed corporate loans stood at 776 billion euros in
January, compared with 915 billion euros at the height of the
sovereign debt crisis in November 2011.
($1 = 0.9471 euros)
($1 = 0.9469 euros)
(Reporting by Valentina Za; Editing by Toby Chopra; editing by
Francesca Landini and Toby Chopra)