The government earlier this week approved an emergency decree that affects the 10 biggest cooperative banks, scrapping rules that give shareholders one vote regardless of the size of their stake. The change, which the banks have 18 months to implement, is aimed at shaking up a financial sector that has long been fragmented, tight on credit and often hostage to local political interests.

"I expect some action. I expect both (consolidation and takeovers) and possibly other combinations," Padoan said in an interview with Reuters on the sidelines of the World Economic Forum in Davos, Switzerland.

Padoan said Italy's Monte dei Paschi, the bank that emerged the worst off in the European Central Bank's recent health-check of the sector, was not the trigger for the recent reform. But he said the troubled lender might indirectly benefit.

"It goes without saying that if the market works better in terms of capital access, then this will facilitate all transactions, including possibly Monte dei Paschi," he said.

Padoan, who spoke shortly after Italian Prime Minister Matteo Renzi addressed the Davos meeting in a keynote speech, said he expected the European Central Bank to launch quantitative easing on Thursday.

"I expect that a decision is taken, first of all, because we cannot wait any longer. I seriously think that the risk of deflation has to be tackled," said Padoan.

He said he would like to see quantitative easing implemented across the euro zone as a whole rather than split up along national lines.

"I would like to see a mutualised monetary policy action, meaning that there is no distinction between impacts on different countries," he said.

If that does not happen, he said the result would be "single monetary policy implemented according to segments."

"This is another element of fragmentation of monetary union which is very negative. This is something that signals that monetary union is far from complete," he said.

(Reporting by Alessandra Galloni; editing by James Mackenzie)