ITALIAN banks are struggling under the growing weight of non-performing loans as the economy continues to perform poorly, according to a report out today from Deloitte, and are increasingly looking to sell off the bad assets.The survey of senior managers found 70 per cent expect the volume of non-performing loans to rise this year, and 75 per cent expect to sell bad assets next year.Of a total combined asset base of €1.7 trillion, the banks studied have €100bn in non-performing loans.Rising unemployment was seen as the driver of rising bad debt by 41 per cent of respondents, while falling property prices and the global crisis were also blamed.However the banking sector did show unexpected strength yesterday as UniCredit raised €750m in a covered bond issue – the first Italian to do so this year.The five-year bond’s yield came in at roughly 100 basis points below the rate on the government’s debt, surprising analysts.“There was huge demand for this despite it being mid-August, but it seems like it is because of the lack of supply in recent months,” said RBS’ Jan King. “It will be interesting to see whether other large Italian and Spanish banks try to jump in this in the coming weeks.”