3rd UPDATE:Italy Banks In EUR1.6 Billion Cheap Loans To Lift Tourism

Italian banks including Intesa Sanpaolo SpA (ISP.MI) and UniCredit SpA (UCG.MI) will provide EUR1.6 billion in cheap loans to help lift the tourism industry, Premier Silvio Berlusconi said Wednesday.

The plan, which also includes Banco Popolare (BP.MI), Banca Popolare di Milano (PMI.MI) and Banca Popolare di Sondrio (BPSO.MI), aims to make it easier for companies operating in tourism to secure credit, Berlusconi said.

The prime minister said the government wants to nearly double the contribution tourism makes to Italian national output - currently around 10% of gross domestic product - in the next four years. He said tourism accounts for 18% of Spain's GDP.

The tourism industry contracted around 5% in 2008 as the global economic downturn hit travel to Italy's cultural and natural sites. The sharp slowdown in the world economy is expected to lead the Italian economy as a whole to contract by about 5% in 2009, marking the worst recession since the Second World War.

Some 14,000 bank branches across Italy will provide low-interest loans of up to EUR2 million for tourism buildings which need to be renovated or rebuilt, the premier said in presenting the plan with bank and tourist officials.

Intesa Sanpaolo and UniCredit said they would take part in the scheme by putting forward EUR600 million and EUR500 million respectively for small- and medium-sized companies operating in tourism that want to develop their business. Banco Popolare said it would contribute with EUR200 million.

Berlusconi told a press conference with his new tourism minister, Michela Vittoria Brambilla, that he was proud of Italy's banking system and reiterated that the country's banks are the most solid in Europe.

The EUR1.6 billion in easier credit is available immediately so that companies can take advantage of the summer season that has just started, Brambilla said.

-By Luca Di Leo, Dow Jones Newswires; [phone]; [e-mail]