FRANKFURT European Union rules permit state aid to Italy's banks, and the sector needs to be cleaned up because there are too many weak lenders in a saturated market, European Central Bank chief economist Peter Praet said on Wednesday.
"Even Germany put public money into the banks at the height of the crisis," Praet, who sits on the ECB's Executive Board, told German newspaper Die Zeit. "At that time, Italy did not."
"In my view, much more important than the question of where the money comes from is that there is a clear-out in the banking sector," Praet said. "There are too many banks in Italy and they are not profitable enough."
(Reporting by Balazs Koranyi, editing by Larry King)