ROME/BRUSSELS (Reuters) - Italy is set to approve an emergency decree to wind up regional lenders Veneto Banca and Banca Popolare di Vicenza using state aid on Saturday, a source close to the matter said after the European Commission gave a preliminary green light to the move.
The decree will create conditions for the sale of the banks' assets to a bigger bank, the person added.
Intesa Sanpaolo (ISP.MI) has offered to buy the good assets of the two banks for one euro, while the lenders' soured loans and legal risks will be transferred to a "bad bank" financed partly by the state.
Earlier on Friday the European Central Bank ruled that the two regional lenders were failing or likely to fail and should be wound up under Italian insolvency procedures.
The Commission said in a separate statement that "EU state aid rules allow for the possibility of granting state support in these kind of situations", adding that depositors and senior bond holders were not required to contribute to the rescue.
Reporting by Foo Yun Chee in Brussels, Giuseppe Fonte in Rome, writing by Agnieszka Flak