June 11, 2013 / 2:27 PM / 7 years ago

Bad debts still rising for banks in Italy's Lombardy-BOI

MILAN, June 11 (Reuters) - Italian banks in the wealthy northern region of Lombardy, home to nearly one third of the country’s banking industry, are still grappling with growing bad debts, the Bank of Italy said on Tuesday.

Lombardy, home to Italy’s two biggest lenders - Unicredit and Intesa Sanpaolo - is struggling with a painful recession that has wiped 3 percentage points off its gross domestic product since 2008.

At the end of last year, new non-performing loans were equal to 2.8 percent of overall lending for companies based in the region, up from 1.9 percent in 2011, a report published by the central bank showed.

Leading indicators on loan quality have so far indicated no sign of any change in fortune for lenders in the region.

“Indicators such as the number of problematic loans are still sending negative signals, so we cannot say that non-performing loans have reached a peak for now,” said Bank of Italy economist Paola Rossi who helped compile the survey.

Recession in Lombardy has mainly hit the manufacturing and construction sectors, which saw 16,500 companies in the region wound-up last year, the survey said. (Reporting by Francesca Landini and Luca Trogni; editing by Tom Pfeiffer)

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