There should be no illusions that bank lending can return to the levels seen before the global financial crisis, the Chief Executive of Italy's biggest bank UniCredit said on Saturday.

"We should not delude ourselves that lending can become abundant again as before the crisis," Federico Ghizzoni said during a conference, referring to the U.S. subprime crisis that started to spread around the world in 2008.

Ghizzoni said the interbank lending market had still not recovered from a near-complete shutdown seen in the most acute phases of the euro zone crisis last year and this year.

Furthermore, the new capital requirements being introduced under the so-called Basel III capital regime have impacted the ability to offer loans.

Italian banks have benefited from a glut of cheap European Central Bank funds and higher customer deposits, Ghizzoni said. But rising levels of bad debt have made them increasingly reluctant to extend credit to the private sector.

Ghizzoni also said Italian and foreign capital was ready to flow back into Italy but was held up because of a series of unknowns linked to general elections scheduled for the spring.

(Reporting By Giselda Vagnoni, writing by Stephen Jewkes)