The European Commission and Italy reached an accord on Tuesday on a scheme to help Italian banks sell some of their 200 billion euros ($217 billion) of bad loans, ending almost a year of often-tense negotiations.
Banks transferring their bad loans to a vehicle that will use them as collateral to issue debt will be able to buy a guarantee to back the senior tranche of debt notes.
The state guarantee is aimed at helping the banks sell the loans at a higher price, reducing potential loan loss charges.
The price of the guarantee will be based on the lenders' credit default swaps, which represent the cost of insuring a bank's debt against default, the treasury said in a statement.
The price of the guarantee is set to rise progressively after the first three years.