Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Controversial rapper cancels Bataclan concerts

Read more

THE WORLD THIS WEEK

Brett Kavanaugh hearings: Trump challenges Supreme Court nominee's accuser

Read more

#THE 51%

One is not enough: China to encourage people to have more children

Read more

ENCORE!

A Pulitzer Prize-winning 'Trajectory': Richard Russo on writing small town America

Read more

#TECH 24

Hacking the body, and the mind: The future of connected humanity

Read more

REPORTERS

Colombia: Cursed by coca in Catatumbo

Read more

FOCUS

Britain’s Labour Party: No home for Jews?

Read more

IN THE PRESS

Outfoxed: The mystery of the ‘Croydon Cat Killer’

Read more

YOU ARE HERE

Backstage at the Moulin Rouge

Read more

Europe

Italy gives 5.2 bln euros to keep two banks afloat

© TIZIANA FABI / AFP | People take part in a protest against the collapse of four Italian banks in central Rome on December 22, 2015

Video by Solange MOUGIN

Text by NEWS WIRES

Latest update : 2017-06-26

The Italian government on Sunday made 5.2 billion euros ($5.8 billion) of resources immediately available to keep operative two banks that the European Central Bank has deemed "failing or about to fail," sending them into insolvency procedures.

Premier Paolo Gentiloni defended the swift action by the government as vital for ensuring Italy's slow economic recovery isn't derailed by a "disorderly" failure of Veneto Banca and Banca Popolare di Vicenza.

The two banks are based in the northeast Veneto region, one of Italy's most economically productive. They serve many of the small and medium-sized businesses that are the backbone of the nation's economy.

Economy Minister Pier Carlo Padoan assured Italians that on Monday "there will be normal operations at the teller windows" when the two banks reopen their doors after the weekend.

The European Central Bank on Friday night pulled the plug on the two troubled banks, which have struggled with high levels of outstanding loans.

The resources approved by the government will facilitate, as widely anticipated, Italian bank Intesa Sanpaolo's taking on the "good" assets of the two banks.

Gentiloni said the government's move at an ad hoc Cabinet meeting Sunday afternoon was mainly aimed at saving "account-holders, savers, of these two banks, in favor of those who work in these banks, and in general in favor of the economy of the territory, one of our most important."

He also deemed the help vital "for the good health of our banking system," which is seen elsewhere in Europe as a weak point in Italy's economy.

Banks that can't issue loans hamper Italy's businesses from bouncing back, and also pose vulnerability to the eurozone economy as a whole.

Padoan told reporters that the overall price tag for the rescue operation would eventually be nearly 17 billion euros ($20 billion) because it would include Italian government "guarantees" for 12 billion (some $13.5 billion).

He defended the government actions as "burden-sharing, not a bail-in," saying "all this is in full respect of EU rules."

"The government has utilized European rules in the best possible way," Padoan said.

Padoan also insisted there would be no impact on public finances.

With the government taking on the so-called "bad assets" of the two banks, some of the costs might be recouped eventually, Padoan noted.

He added that small account holders and "senior share holders" would see their funds "100 percent repaid."

But subordinate bond holders could face risks. Also at risk are bank employees' jobs. Italian media reported that Intesa Sanpaolo's taking over the troubled banks could lead to thousands of layoffs and the closing of hundreds of small branches.

(AP)

Date created : 2017-06-25

  • ITALY

    Threat of Brexit contagion hangs over Italy's referendum

    Read more

  • EUROPE

    French banks posted 'multi-billion euro profits' in tax havens

    Read more

COMMENT(S)