(Adds data on bad loans, govt bond holdings)
MILAN Jan 10 Italian banks' loans to businesses
in November declined at the fastest pace since records began in
2001 while bad debts rose to nearly 122 billion euros ($159
billion), Bank of Italy data showed on Thursday.
Data from the central bank also showed that private sector
deposits rose 6.6 percent in November from a year earlier, after
an increase of 4.7 percent in October.
Lenders however did not pour that money back into the
economy, and loans to non-financial firms fell 3.4 percent - the
seventh consecutive monthly decline and the biggest drop since
the statistics series started in July 2001.
The fall in lending to companies is exacerbating a credit
crunch in the euro zone's third largest economy, which has been
stuck in a recession since the middle of 2011.
Instead, banks continued to pile into Italian government
bonds, taking their holdings to 344.3 billion euros from 340
billion euros a month earlier.
Bad loans, a major concern for investors, rose by 16.7
percent from a year earlier to 121.8 billion euros. By
comparison, bad loans totalled 77.8 billion euros in 2010.
($1 = 0.7667 euros)
(Reporting by Silvia Aloisi and Gabriella Bruschi; Editing by