billion and all their non - performing loans ( €9. 9 billion net of write - downs ) ; on the liability side, they hold capital, junior bonds and risk provisions totalling €6. 2 billion. the €5. 4 billion difference constitutes a debt to intesa sanpaolo, which simultaneously acquires all the other assets and liabilities of the banks in liquidation. this debt ( which may be revised upwards to €6. 4 billion following the due diligence on the performing loans ) is guaranteed by the state, which has also granted the acquirer other guarantees, with an estimated fair value of €400 million, to cover various risks. the immediate burden on the state consists of a cash injection of €4. 8 billion, of which €3. 5 billion to intesa sanpaolo to cover its capital needs following the acquisition, and €1. 3 billion to cover the cost of the restructuring measures that intesa sanpaolo must implement. as a counterpart of these undertakings, the state is a creditor vis - a - vis the banks in liquidation and will be reimbursed through the sale of their assets. the non - performing loans will be assigned to societa di gestione delle attivita ( sga ), which will have to work towards eventually obtaining recovery rates consistent with those implied by the loans ’ book values, which are net of write - downs. the costs of a standard liquidation procedure ( ‘ atomistic liquidation ’ ), the only available alternative once precautionary recapitalization has been excluded, would have been much higher for customers, the banking system, and even the state. the situation of italy ’ s banks and the problems currently being addressed credit quality continues to improve, sustained by the economic recovery. the ratio of new non - performing loans to total outstanding loans has fallen to the levels prevailing before the crisis, dropping to 2. 4 per cent in the first quarter of this year. the stock of npls has also fallen : at the end of march, the ratio of npls to total outstanding loans fell for the significant banking groups as a whole to 9. 2 per cent, net of write - downs, from a peak of 11. 4 per cent recorded in the second half of 2015. the coverage ratio had reached 53 per cent, compared with an average of 45 per cent for the leading european banks. sales and securitizations currently under way will lead to a further significant

fully. the debate at european level is focusing again on the practicality of setting up a specialized company for managing the non - performing assets with public support to reduce the weight of these exposures in banks ’ balance sheets and to develop the npl market. as i have already pointed out, we believe that introducing this type of measure could be useful, provided it is finalized as soon as possible. to be truly successful, the disposal price of the assets should not diverge too much from their real economic value. banks ’ participation in the scheme should be voluntary and the various elements of their restructuring plans should be decided beforehand. europe is also considering the introduction of mechanisms that set compulsory minimum write - downs, increasing over time, on new loans to be classified among non - performing exposures ( known as calendar provisioning ) – so as to reach high levels of coverage fast. should such mechanisms be introduced, even with the necessary graduality, the significant differences in civil justice processes and loan recovery times across europe would acquire even greater weight. the creation of cooperative banking groups is proceeding along the lines set out in the reform law. at the end of this process, two of the three new groups ( iccrea and cassa centrale banca ) will be ‘ significant ’ for supervisory purposes and will therefore be subject to direct supervision by the ecb. before this happens, the two groups must undergo a comprehensive assessment, based, as in 2014, on an asset quality review and a stress test. this is currently scheduled for the first half of next year and will be tailored to take account of the fact that the institutions will not only be new to italy ’ s banking sector but will also still be taking shape. certain key elements are essential for the reform to be successful. the parent banks must complete a difficult transformation over the next few months to enable them to head very large and complex groups. extensive discussions are already under way with the supervisory authorities, which will need to approve the main contractual clauses : by - laws, cohesion contracts and crossguarantee schemes. the process must now continue apace : organizational and decision - making mechanisms must be strengthened, senior management must possess high levels of competency and professionalism, and the steps needed to integrate it systems must be rigorously planned. the comprehensive assessment should be prepared well in advance ; in terms of capital adequacy, the parent companies will have to draw up plans enabling them – with equanimity and right from the word go –