Italy banks' 2012 profit outlook ‘not favourable’

PARMA: The profit outlook for Italian banks this year is "not favourable" as a recession in the euro zone's third biggest economy bites, Bank of Italy Governor Ignazio Visco said on Saturday.

Visco, speaking at a conference in Parma, said that over 2011, banks' fundraising from customers and markets declined by 2.8 percent, while their reliance on borrowing from the European Central Bank increased.

Thanks to measures taken recently by the Bank of Italy, and allowing domestic banks to use banking loans as collateral for ECB funds, the total collateral available to the lenders will rise to nearly 450 billion euros, Visco said.

Loans by Italian banks to companies declined by 20 billion euros in December, he said.