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EU Economics

Italian banks on brink of running DRY: Rome forced to bend EU rules in emergency bailout

ITALY is plotting another multibillion rescue of its beleaguered banking system, as two struggling lenders come dangerously close to running out of money.

Rome wants to inject around £4.2billion (€5bn) into Veneto Banca and Banca Popolare di Vicenza, by bypassing European rules that ban taxpayers’ cash from being used to bailout banks.The two banks are haemorrhaging cash at an alarming rate, according to the Financial Times, sending Italy into panic.

But the new so-called precautionary recapitalisation plan still needs approval from Brussels to go ahead.

Italy banksGETTY

More of Italy’s banks are set to be bailed out


And there is doubt over whether top bureaucrats will sign-off the bail out.Rome pulled together a £17bn (€20bn) fund in December to be used for saving its banking system from collapse.

About £6.7bn (€8bn) is earmarked for its oldest and most fragile lender Monti die Paschi di Siena, after private investors would not stump up the cash needed to steady the bank.

Lenders are bogged down by around £270bn bad loans – a third of the eurozone’s total – which is dragging down the economy, which grew by just 0.2 per cent in the final quarter of 2016.

But under European Union (EU) rules brought in after the financial crisis, retail investors must take a hit before state money is used for a bailout.

In Italy such a move would be devastating for many savers and pensioners.Last year Rome reportedly begged Brussels to allow it to step-in to rescue struggling banks, but was turned down.

http://www.express.co.uk/finance/city/767721/Italy-banks-bailout-Rome-EU-rules

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