Italian banks are facing hard times -- torn between growing lending requests by government and businessman and a sheer rise of bad loans which are expected to increase more in the coming 12 months, according to a Bank of Italy official on Friday. "Banks should lend to companies ahead of the economic recovery in a way that allows the banks to still be there at the end of the crisis", the banking association ABI head Corrado Faissola said on Friday. "The commercial banks find themselves in very serious difficulty." Stress tests conducted on Italian banks showed that they have adequate capital even if the macroeconomic scenario were to worsen, Italy governor Mario Draghi said last week. ABI, the employers organisation Confindustria and the Treasury met on Thursday to discuss a moratorium on companies paying off their loans. The three parties are working on a one-year moratorium on reimbursement of the capital part of company loans, on leasing and mortgage loans, Confindustria Chairwoman Emma Marcegaglia said on Thursday. Confindustria is aiming for an agreement before the summer break, she said.