ROME - Italy plans to renew for up to 36 months a state guarantee scheme to help banks shed bad loans, according to a draft law decree seen by Reuters, as it battles to get to grips with a long-standing drag on economic growth.
Based on the document, the government can introduce the new guarantee scheme for 24 months starting from the date it receives a green light from the European Commission.
The government can then agree with the European Union a further 12-month extension after the two years, the document showed.
Italy first introduced its 'GACS' guarantee scheme back in 2016 to ease sales of bad bank loans. That scheme expired on March 6 after banks used it to push 44 billion euros ($50 billion) of bad debts off their balance sheets in 2018 alone, according to bad loan data provider Credit Village.
The draft decree also contains measures aimed at ensuring banks can continue to operate smoothly in the event of Britain leaving the EU without a deal.
Two government sources said the decree was expected to be examined at a cabinet meeting on Wednesday, following a preliminary discussion later on Tuesday.
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(Reporting by Giuseppe Fonte; Writing by Valentina Za; Editing by Agnieszka Flak and Mark Potter) ((valentina.za@thomsonreuters.com; +39 02 6612 9526;))
