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Italian banks are set to shed 70 billion euros ($82 billion) in bad loans in 2018, with a strong market for disposing of such assets in prospect in the years ahead, PwC said on Wednesday.

Regulatory pressure has forced Italian banks to sell off loans that turned sour during a deep recession, in a clean-up seen as essential before mergers to strengthen the sector.

“Volumes of bad loan sales will remain healthy in years ahead ... banks have a pipeline for disposals,” Vito Ruscigno, co-head of non-performing loans at consultancy PwC, said.

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While banks have made great progress in shedding defaulted loans, they have not yet tackled 94 billion euros in loans unlikely to be repaid in full, PwC said, calculating that half of those remained in the ‘unlikely-to-pay’ category year after year - increasing the risk they will eventually default.

A favorable phase-in regime for a new accounting rule prompted Italian banks to write down billions of euros in bad loans to disposal value in the first quarter.

Since then, however, Italy’s financial sector has plunged into uncertainty as investors await the first policy moves of a new anti-establishment government. Investors expect sales of bad debt to continue, but with a bigger discount to buyers.

Ruscigno, presenting a twice-yearly PwC report, said the recent rise in Italian government bond yields already almost offset the advantage offered by a guarantee scheme engineered by the previous government to help banks fetch a higher price.

PwC calculates the state guarantee, introduced in 2016 after months of tense negotiations with EU authorities, will be tapped for some 40 billion euros of this year’s sales.

The scheme expires on Sept. 6 and while Italy is widely expected to be granted EU approval for a six-month extension, it is not clear whether the new government - which has strongly criticized previous efforts to shore up banks - will prolong it.

Pier Paolo Masenza, a partner at PwC, said the scheme had revitalized the market for bad loan securitisations which would not stop now.

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PwC calculates Italy’s gross soured loans totalled 264 billion euros at the end of last year, following disposals worth 64 billion euros, twice the amount sold in 2016.

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