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Bad loans at Italy banks up 20 percent in August to record high

[October 09, 2014]  MILAN (Reuters) - The Bank of Italy said on Thursday bad loans in the country rose 20 percent year-on-year in August reaching a new record high as the third-largest economy in the euro zone struggles to recover from recession.

The loans that are least likely to be repaid were worth 173.9 billion euros ($222 billion) in August, the highest level since the start of the current statistical series in 1998, central bank data showed.

In July, non-performing loans rose 20.5 percent to 172.4 billion euros.

At the same time, lending to companies and families continued to contract, with loans to households down 0.8 percent in August after falling 0.7 percent a month earlier.

Credit to non-financial companies fell 3.8 percent after a contraction of 3.9 percent in July.

(Reporting by Stephen Jewkes; Editing by Francesca Landini and Catherine Evans)

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