ROME, July 14. (Reuters) – The Italian government is working on new measures to help banks cope with a projected increase in UTP due to the impact of the COVID-19 pandemic, the Finance Ministry said Wednesday.
The announcement comes as banks are expected to face a sharp increase in bad loans after governments begin lifting measures to keep companies afloat during the health crisis.
“We are exploring a scheme to manage UTP loans and prevent significant erosion of corporate value,” Treasury CEO Alessandro Rivera said in a parliamentary hearing.
Unlike bad loans, UTP loans are not overdue yet and can be repaid by restoring the health of the borrowers.
Rome is also considering transferring the state-owned problem loans company AMCO to manage borrowers who will face difficulties after gaining access to government guarantees, government sources told Reuters.
Italy has guaranteed more than 210 billion euros ($ 248.22 billion) of debt that banks have provided to companies affected by the virus.
Rivera also ruled out the possibility of a temporary relaxation of stricter EU calendar reserve rules for banks, which force lenders to write off impaired loans in full over a number of years.
1 dollar = 0.8460 euros Reporting by Giuseppe Fonte; Edited by Kirsten Donovan