Italy expects European authorities to block an extension to a plan to compensate thousands of people who lost savings when their banks collapsed, a government source said on Wednesday.
A rejection would be a harsh blow for the 5-Star Movement, which included the compensation scheme in its campaign promises before being elected to head a coalition government last year.
More people would qualify for reimbursements under the new plan, which was approved as part of a package of economic measures in the early hours of Wednesday during a bad-tempered meeting between 5-Star and its partners, the right-wing League.
A spokesman for the EU commission declined to comment on the plan and said Brussels will analyse the text once Rome submits it.
In April, European Union competition authorities approved payments for those affected with an annual income of up to 35,000 euros ($39,000) or assets of up to 100,000 euros.
But under the new proposal, which still needs EU approval, people with assets of up to 200,000 euros would qualify.
"We expect the Commission offices to say no," the Italian government source told Reuters, on condition of anonimity.
The government has set aside 1.5 billion euros to pay back savers who bought shares and bonds issued by regional lenders including Veneto Banca and Popolare di Vicenza, and lost their savings when the banks collapsed.
The Italian reimbursement scheme is an exception to European rules, drawn up after the financial crisis, which usually make banks and their creditors, rather than taxpayers, responsible for bank collapses.
