MILAN/ROME UniCredit (CRDI.MI) could spend up to 10 billion euros ($14 billion) to take on payments owed to companies by Italy's public administration, the bank's chief executive said in a newspaper interview on Friday.
The Italian state owes some 68 billion euros to private companies, which has starved firms of cash and triggered layoffs, factory closures and even bankruptcies.
Prime Minister Matteo Renzi has promised to find a solution to the debt arrears by July, though speaking on television on Thursday he seemed to push back the deadline to late September.
A cabinet meeting this week discussed a draft bill whereby local governments would confirm the validity of claims and the state would guarantee the debts, in a bid to ease their sale to banks and the Cassa Depositi e Prestiti (CDP), a state holding.
The head of the CDP, Franco Bassanini, said it would be in the banks' interest to buy the commercial arrears as this would improve their balance sheets as they are being scrutinised by European regulators.
"We have up to 10 billion euros for these operations," UniCredit's Federico Ghizzoni told newspaper La Repubblica, adding the public administration would have to confirm the validity of the claims before the bank would take on the debt.
The role of the CDP could be key because one option would be to use the state-holding to pay off the commercial arrears.
Under the scheme, which would need European approval, the CDP will pay off cash-starved companies immediately, while the government will then repay the CDP gradually over coming years.
This would spread out the inevitable increase in public debt, which is only booked when bonds are issued by the state to reimburse the CDP.
Bassanini said in a newspaper interview earlier this week banks would be ready to accept a discount as small as 2 percent.
Bassanini said that many of the businesses that are owed money from the state have in the meantime borrowed from the banks. So if the banks bought the arrears, their main debtor would become the state rather than the private firm.
Guaranteed by the state, the debts would be seen as less risky, and so free up capital on the banks' books, he said.
He added lenders could also use the state-backed credits as collateral to borrow from the European Central Bank.
($1 = 0.7180 euros)
(Reporting by Isla Binnie in Milan and Giuseppe Fonte in Rome,; Editing by Greg Mahlich and David Evans)