Forced by regulators to tackle the legacy of a deep recession, Italian banks have shed some 170 billion euros in impaired loans in the past three years.

"We reckon Italy will see another 130-150 billion euros of NPL deals in the next five years," Passera told reporters on the sidelines of a conference.

"Banks still have some work to do ... (though) there won't be more big packages (of loans being sold) or large, undifferentiated deals - managers of non-performing loans will have to specialise."

(Reporting by Riccardo Bastianello, writing by Valentina Za and Kirsten Donovan)