Nov. 13 (Bloomberg) -- Intesa Sanpaolo SpA Chief Executive Officer Corrado Passera said Italy's government should offer banks perpetual, subordinated loans repayable in cash, daily Il Sole 24 Ore cited the executive as saying in an interview.

Passera said no Italian bank needs to draw on the package, Il Sole reported. Still, state intervention in Italian banks would help ``avoid competitive distortion'' with rivals in other countries, the newspaper cited Passera as saying. The government's entry into the capital of the country's banks isn't ``indispensable,'' he said.

Intesa will take part in the restructuring of the debt of Romain Zaleski and the funding the bank gave the financier is a ``minimum'' of its portfolio, Passera said.

Telecom Italia SpA is Intesa's ``most disappointing'' investment, Passera was cited as saying, adding he was ``certain'' the telephone company's management would make improvements.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

Last Updated: November 13, 2008 03:05 EST