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Letta denies ruling out 'bad bank' to fight credit crunch

Financial Times said Italy afraid of hurting rating

10 February, 13:46
Letta denies ruling out 'bad bank' to fight credit crunch (ANSA) - Rome, February 10 - Premier Enrico Letta on Monday denied a report from the Financial Times that Italy has rejected the idea of setting up a so-called "bad bank". "The premier has never said he was opposed," said a statement from his office. A bad bank is a financial institution that holds non-performing assets owned by a state-guaranteed bank created to offset the effects of a credit crunch. Citing an unnamed government official, the UK financial daily reported Sunday that Italy was afraid such a bank would put the country's credit rating at risk by focusing market attention on the exposure of its banks to a rising level of non-performing loans. Ignazio Visco, the head of the Bank of Italy, argued in favor of creating a bad bank in a speech to Italy's top bankers over the weekend, underlining that lending to Italian companies, especially smaller firms, had fallen 9% in the past two years.

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