Rome, January 27 - Italy reached a deal with the European Commission late on Wednesday for a mechanism to manage over 200 billion euros in bad loans that are weighting on the balance sheets of Italian banks. "An agreement has been found with the EU about a guarantee mechanism for non-performing loans," Economy Minister Pier Carlo Padoan said after five hours of talks with European Competition Commissioner Margrethe Vestager. "This completes the Italian tool box for managing bad loans". The mechanism will help lenders offload bad loans with the help of guarantees given at market prices that the EU does not consider State aid. Rome and Brussels had been in talks about the possibility of setting up a bad bank to put the NPLs into, but this ran into problems due to European rules against State aid. Vestager said she was "very satisfied" at a "very good" agreement.