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Italy bank fund ‘no state aid, not a bailout’: FinMin

The bank fund set up by Italian financial institutions to help weaker, smaller lenders is a "private sector initiative" and "market-based" as far as intervention is concerned, Italy's finance minister said on Thursday, keen to stress that the deal involves no state aid.

"It's not a bailout. It's a vehicle," Pier Carlo Padoan told CNBC on Thursday.

The fund is a private-sector initiative to buy up struggling Italian lenders' bad loans and was set up in response to growing concern over the country's banking sector. Shares in Italian banks have fallen sharply since the start of the year as fears over non-performing loans on their books grew. The fund is an attempt at easing those fears, and Italy is keen to present it the fund as privately run to avoid scrutiny from European Union regulators who could argue that it amounts to state aid.

Banks, insurance companies and "non-Italian industry people" will, on a voluntary basis, put money into a fund which will work as a backup for the recapitalization of some banks, Padoan explained. It will also "shake up" the non-performing loans market, he said.

"The idea is to kick off the market with some initiative that would generate a positive leverage effect," Padoan, a technocrat who took over as finance minister in 2014 and was previously deputy secretary-general at the Organization of Economic Co-operation and Development, said.


Italy's economy is expected to grow 1.2 percent this year and 1.4 percent in 2017, according to new figures reported by Reuters on Friday.

"We did have a deep recession…now we're growing again," Padoan said. "We're going to be growing even faster again this year and next year. It's not exceptional Chinese growth rates but this is in line with the euro zone as a whole. "

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CNBC's Michelle Caruso-Cabrerra contributed to this report