Despite dragging itself out of recession last year, Italy only did so at half the pace achieved by the eurozone as a whole. Analysts say that unless Italy's Government gets serious about tackling the bad debts that are crushing the country's financial system, its economy will continue to underperform its peers, say analysts. Sadly, economists are only mildly optimistic on its prospects for doing this, due to the sheer volume of non-performing loans, typically defined as debts that have been delinquent for 90 days or more; Italy's bad loans have soared to over €200bn ($$218.8 billion), a fourfold increase since the end of 2008, with more and more borrowers falling behind, despite the improved economic backdrop. A need for action was highlighted yesterday when shares in Monte dei Paschi dei Siena and other Italian banks fell due to fading expectations that the banking sector will benefit from a wave of mergers and the Italian Government's solution to its bad loans issues. An attempt by the government to set up a special vehicle to help banks rid themselves of bad debts has stalled, due to European Commission opposition.
Despite dragging itself out of recession last year, Italy only did so at half the pace achieved by the eurozone as a whole. Analysts say that unless Italy's Government gets serious about tackling the bad debts that are crushing the country's financial system, its economy will continue to underperform its peers, say analysts. Sadly, economists are only mildly optimistic on its prospects for doing this, due to the sheer volume of non-performing loans, typically defined as debts that have been delinquent for 90 days or more; Italy's bad loans have soared to over €200bn ($218bn), a fourfold increase since the end of 2008, with more and more borrowers falling behind, despite the improved economic backdrop. A need for action was highlighted yesterday when shares in Monte dei Paschi dei Siena and other Italian banks fell due to fading expectations that the banking sector will benefit from a wave of mergers and the Italian Government's solution to its bad loans issues. An attempt by the government to set up a special vehicle to help banks rid themselves of bad debts has stalled, due to European Commission opposition.