ROME (Reuters) – Italy’s industry minister, Adolfo Urso, has no plans to promote measures to help borrowers in arrears and would rather leave the matter with parliament, he told Reuters, after proposals to reform bad-loan legislation alarmed investors.
Urso has long advocated introducing measures to allow borrowers that have fallen in arrears still redeem their debt somehow, and avoid foreclosure.
In recent months a growing number of lawmakers from both ruling and opposition parties have backed proposals to amend bad-loan rules to help borrowers — both individuals and small- and medium-sized businesses — stoking uncertainty in the sector that buys up bad loans, which is already facing a dearth of activity.
“We are in talks with players in the bad-loan industry, but we’ll defer to parliament on this. If by any chance there was an agreement at the parliamentary level on how to proceed, the government should listen to that,” Urso told Reuters on Wednesday.
Disposals of bad bank loans amounting to more than 300 billion euros ($325 billion) in recent years have turned Italy into Europe’s biggest market for such debt.
Sources told Reuters last month the Industry Ministry was working on its own package of measures focused on helping small businesses struggling with debt repayments.
But Urso said his ministry did not intend to announce any official initiative at this stage.
“There are several proposals in parliament on the topic of bad loans, so we need to await the outcome of those, then we’ll see,” he said.
The Bank of Italy and the Economy Ministry have both moved behind the scenes to defuse the threat of legislative changes that would harm the market for bad loans, according to people with knowledge of the matter.
Newly appointed Bank of Italy Governor Fabio Panetta this month said it was important to develop an effective secondary market for bad bank loans and that he was disappointed by progress so far.
Last week the Financial Stability Board, a global risk watchdog, urged Italy to refrain from introducing measures that would undermine the country’s market for impaired bank loans.
($1 = 0.9229 euros)
(Reporting by Giuseppe Fonte and Valentina Za; Editing by Leslie Adler)
