CERNOBBIO, Italy, Sept 2 Italy must continue to
tackle legal issues hampering the reduction of bad bank loans if
it wants to improve market valuation of its lenders, European
Central Bank's Executive Board member Yves Mersch said on
Italian banking shares have suffered this year -- and are
now trading at a fraction of their assets' value -- as investors
fretted about a pile of problematic loans that grew during a
long recession to total nearly one fifth of overall lending.
"It has to be pursued in a determined way," Mersch said when
asked about the issue of non-performing loans in Italy.
"It's a general issue that is a legacy of the last years of
the crisis ... it has (to be dealt with) according to the
weaknesses that have been identified in each country," he said
on the sidelines of the Ambrosetti business forum.
Mersch said the situation was different in each country
because the legal framework was a key factor.
"In Italy there are certainly questions in terms of
insolvency law implementation and ... and the realisation of
collateral which is more difficult than it is in other
Asked if Italy had done enough in the way of reforms he
said: "This is something for the market to assess and ... you
will see the market reaction."
(Reporting by Valentina Za, editing by Francesca Landini)