UPDATE 2-Italy needs speedier judiciary system to help banks tackle problem loans - Visco

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ROME, Feb 10 (Reuters) - Bank of Italy Governor Ignazio Visco on Wednesday called for a speedier judicial system in the country to help banks to manage problem loans.

“Delays in the civil judiciary continue to be the main obstacle in reducing non-performing loans (NPLs) in our country,” Visco told a parliamentary commission. “Progress on this front would allow speedier company restructuring procedures and, when possible, the recovery of credits.”

Visco added that the ECB’s calendar provisioning rules for problem loans would not be an issue if the length of civil proceedings were in line with those of the rest of Europe.

The governor said bad loans remained the main risk facing Italian lenders but added the banking system was stronger than in the past.

He said schemes for state-backed loans and deferred tax assets (DTA) to help offload non-performing loans had worked well and needed to be confirmed and extended.

In 2020, Italian banks converted 800 million euros ($970.24 million) in DTAs into tax credits thanks to the sale of bad loans totaling 15 billion euros, he said.

Non-performing loans are expected to rise by less than 100 billion euros at the end of next year, based on the central bank’s estimates.

Last year, pan-European bourse Euronext agreed to buy Borsa Italiana, which manages both the Italian stock market and government bond platform MTS, for 4.3 billion euros.

The deal is still subject to regulatory approvals in several jurisdictions and from regulators.

Visco said the Bank of Italy will monitor Euronext’s post trading business which manages Italy’s government debt to ensure it is working in an efficient manner. ($1 = 0.8245 euros) (Reporting by Stefano Bernabei, writing by Giulia Segreti and Giselda Vagnoni. Editing by Jane Merriman)