(Recasts with IMF recommendations, adds details)
MILAN Oct 5 The Italian government has recently
taken a number of measures to tackle bad loans but these efforts
may not be sufficient to strengthen its ailing banking system,
the International Monetary Fund said on Wednesday.
A three-year long recession left a legacy of more than 200
billion euros ($224 billion) in non-performing loans on Italian
banks' balance sheets, and uncertainty over the value of these
loans has depressed investors' appetite for the country's banks.
In its Global Financial Stability Report published on
Wednesday, the IMF said that Italy's recent reform on
insolvency, which introduced extrajudicial procedures to speed
up asset recovery in bankruptcy cases, should be extended to
cover existing non-performing loans and not just new ones.
Italian authorities should also examine the asset quality of
smaller banks that are not scrutinised by the European Central
Bank and monitor that lenders meet ambitious targets set for the
reduction of their bad loans, the fund said.
In comments relating to the restructuring plan of troubled
lender Monte dei Paschi di Siena, the IMF said that
addressing the lack of capital at weak banks is needed to ensure
the stability of the system as a whole and to support the
($1 = 0.8930 euros)
(Reporting by Alessia Pe, writing by Francesca Landini, editing
by Angus MacSwan)