The news coincided with the warning on subordinated debt from Moody's, which said the greatest number of ratings to be reviewed were in Spain, Italy, Austria and France. "Moody's believes that systemic support for subordinated debt in Europe is becoming ever more unpredictable, due to a combination of anticipated changes in policy and financial constraints," the agency said in a report.
Holders of subordinated debt are further back in the queue than owners of senior debt when it comes to a claim on a bank's assets, thus making it a riskier class of debt. Mario Monti, Italy's prime minister and finance minister, will attend today's Eurogroup meeting to explain the reforms Italy plans to undertake to regain the confidence of markets.
Saddled with debt equal to 120% of GDP and soaring borrowing costs, Italy has been battling to avoid financial disaster, which analysts say would endanger the whole euro zone.
Italy must balance its budget by 2013 and offer immediate fiscal measures worth €11 billion if it wants to regain its credibility, according to a document on Italy that will be presented to the Eurogroup, Italy's La Repubblica newspaper said.
In a sign of intense market stress, short-term Italian yields last week climbed above those of longer-dated issues. Both are higher than the 7% level widely seen as unsustainable for the country's public finances.