I don’t pretend to understand all the issues at stake.  But, here is a NYT article that breaks the banking part down.  It was written before the recent “No” vote that caused Matteo Renzi to resign.  Some key parts I’ve highlighted below the article.

A recession that lasted seven years wiped out nearly a quarter of Italian industry. The unemployment rate sits above 11 percent. The population is aging, and too few women are working, limiting spending power. Too many Italian businesses are small operations that are especially vulnerable to globalization. Family-run craft and apparel makers have been destroyed by low-cost competition from China. Negative interest rates maintained by the European Central Bank to encourage lending have cut into bank profit margins.

Italy’s banking pain is a symptom of an Italian business style that has traditionally favored relationships and community ties over a dispassionate analysis of the bottom line — a perception the nation is eager to alter. To visit senior Italian officials in their offices decked out like personal versions of the Sistine Chapel is to hear a recitation of complaints that reforms have gone underappreciated. They betray resentment that Italy continues to be caricatured as the reckless debacle at the center of European economic decline.

The comically ineffectual former prime minister Silvio Berlusconi — a fiercely tanned media magnate — has been dispatched to history. At the controls today is the young technocrat Matteo Renzi, who has delivered a spate of politically perilous reforms long sought by solemn-faced officials in Brussels.

Under Mr. Renzi’s direction, Italy has made it easier to fire workers. This has somewhat diminished a major disincentive to giving people jobs — the not-irrational fear that problem hires will stick around forever, like grown children tethered to the refrigerator. Italy has also sped up civil processes in its notoriously inefficient courts.

The prime minister is now seeking a constitutional change that would refashion the entire legislative process in an effort to break a logjam in the upper chamber of Parliament. He argues it would eliminate obstructions to further pro-growth measures.