Italy's rescue fund has Monte dei Paschi pledge covered

Problem loans totaling around 360 billion euros after a three-year recession have become the focus of investor concerns over Italian banks, weighing heavily on their shares and proving a long-lasting headache for the government.

Monte dei Paschi poses a threat to the wider Italian banking system and the hope is a solution to its problems could mark a turning point in the euro zone's third-biggest economy's banking crisis, which has threatened to trigger contagion across Europe, already rocked by Britain's June decision to leave the EU.

Quaestio Capital Management, which manages Atlante, said in a statement on Monday that its new Atlante II fund had so far raised 1.715 billion euros and was targeting up to 3 billion euros by the end of September.

The fund aims to lift its overall firepower to 3.5 billion euros by the end of July next year, Quaestio added.

Italy sponsored the creation in April of the Atlante fund which raised 4.25 billion euros to shore up the country's struggling lenders.

But it spent more than half of that to salvage two regional banks and is now seeking to raise fresh funds that will be used solely to buy soured loans off lenders.

At the end of July, Monte dei Paschi, whose shares have lost 80 percent this year to touch historic lows, unveiled a plan to sell its 27.7 billion euros of bad loans, part of a broader rescue plan to address concerns over its general health.

As part of the plan, Atlante will underwrite the sale of about 1.6 billion euros worth of the bank's riskier bad loans.

Quaestio said several Italian financial players had committed to its new Atlante II fund but did not provide names.

According to a source close to the matter, a significant part of the funds left over from Atlante's first fund had been pledged to Atlante II.

The source said that not all players who had said they were ready to sign up to the new fund had yet officially committed.

"They will do so by September," the source said.

(Reporting by Stephen Jewkes and Luca Trogni; Editing by Alexander Smith)