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Italian banks won't need aid after stress tests: association

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(Globalpost/GlobalPost)

FRANKFURT (Reuters) - Italy's banks will not require any state funds as a result of the European Central Bank's stress tests this year on euro zone banks, the head of Italy's banking association ABI has told a German newspaper.

The ECB is putting the euro zone's 128 largest banks through a painstaking review of their loan books before becoming their supervisor in November, in a bid to force them to come clean on hidden losses and restore investors' trust in the sector.

"We do not expect any major surprises for Italian banks in the ECB's asset checks and the stress test," ABI chief Giovanni Sabatini told German daily Handelsblatt, according to an excerpt of an interview to be published on Monday.

Even if any of Italy's banks were found to have capital gaps they would be able to close them without external help, for instance by selling non-strategic assets or through capital market transactions, he said.

"They will not require state aid," he said.

Some of Italy's largest banks - UniCredit <CRDI.MI>, Monte dei Paschi di Siena <BMPS.MI> and Intesa Sanpaolo <ISP.MI> - have alreadu announced multi billion-euro writedowns this month as they clean up their balance sheets ahead of the regulatory health checks.

ABI's Sabatini told Handelsblatt that he believed the tests were an important step towards regaining investors' trust but said further steps would be necessary.

"We asked investors what they think about the ECB asset tests," Sabatini said, adding their response was that they only partly believe the results of the tests because not all banks use the same models to calculate their loan risks.

(Reporting by Maria Sheahan; Editing by Greg Mahlich)

http://www.globalpost.com/dispatch/news/thomson-reuters/140330/italian-banks-wont-need-aid-after-stress-tests-association