Italy's government is following with concern a rout in domestic banking shares but the system is solid, Prime Minister Matteo Renzi was quoted as saying.
Italian banking stocks have lost 24 percent this year as investors' attention turned to bad loans as concerns about global growth mount in financial markets.
"We're vigilant and concerned about tensions in the banking sector, though it could even be an opportunity," Renzi told financial daily Il Sole 24 Ore.
"The system is much more solid than what some investors rightly fear ...Current events will ease mergers, tie-ups, purchases."
Shares of UniCredit, one of Italy's biggest banks by market capitalization, have fallen by nearly 28 percent since the start of the year.