Italian policymakers and EU officials have been trying to deal with its fragile banking system, bogged down by non-performing loans (NPLs) estimated to total 360 billion euros ($400.7 billion). Reports had suggested that Matteo Renzi, the Italian prime minister, is hoping to bailout the banking sector, which would contravene EU rules. Such a solution would stand in contrast to a bondholder "bail-in," as Italian households are heavily exposure to the asset class. These reports have since been denied.
These problems in Italy have roiled stock markets in the past few weeks, alongside the uncertainty following the British vote to leave the European Union. Shares of BMPS have been particularly volatile. However, Padoan told CNBC that this particular bank had put in place a "very effective restructuring plan" and said there had been a widespread misunderstanding of the whole industry.
"(Italian banks are) not more vulnerable than they used to be. They have been strengthening over time due to reforms that have been introduced by the government," he added.
Ignazio Visco, governor of the Bank of Italy and member of the ECB, told CNBC Sunday that it was "totally wrong" to fear that the whole banking system in Italy had problems.
Speaking at the same event, he added that a large portion of the NPLs would be resolved in an orderly fashion, and that some had already been written off on the balance sheets of some banks.