MILAN, Oct 2 (Reuters) - Italian bad loan specialists Banca IFIS and Elliott-owned Credito Fondiario said on Wednesday they had agreed to extend talks over a possible debt recovery partnership to Oct. 31.
Italy's loan recovery industry has grown rapidly in recent years as regulators pushed banks to shed 170 billion euros ($186.27 billion) in loans that turned sour during the country's deep recession.
But with disposals of distressed loans starting to slow, the sector is moving towards consolidation and players are rushing to build up scale to cut costs and reduce competition.
Venice-based IFIS and Credito Fondiario on Aug. 2 announced a two-month exclusivity period to discuss a deal to fold IFIS' debt servicing and debt purchasing operations into a new entity that would then become part of Credito Fondiario.
The two companies, which specialise in recovering different types of loans, said they wanted to create a leading player able to tackle all types of distressed debt.
IFIS specialises in unsecured loans while Credito Fondiario has traditionally focused on loans secured by real estate assets.
The companies said talks now exclusively concerned their debt recovery operations.
Two sources familiar with the matter said discussions on combining debt purchasing activities had been put aside in an effort to reach an accord by the new deadline. ($1 = 0.9127 euros) (Reporting by Valentina Za. Editing by Jane Merriman)