MILAN (Reuters) - Italian banks are near saturation point after two years spent frantically buying their own government's bonds, forcing the Treasury to find alternative investors at home and abroad to finance a 2-trillion euro debt.
Lenders' ability to soak up yet more Italian sovereign debt depends largely on the European Central Bank - which in turn says Italy is crucial to the fate of the entire euro zone.
In the coming year the ECB will make strict health checks on banks across the bloc, including a provisional 15 inItaly. It must also decide whether to roll over billions of euros in cheap long term loans which the banks have used profitably to accumulate government bonds, but fall due in early 2015.
Both events will determine how much domestic banks can keep up their support for the Treasury which was vital when the euro zone's third biggest economy teetered on the brink of a Greek-style debt crisis in 2011 and foreign investors fled.