Italy to pay up to $19bn to save two troubled banks

Author: AFPMon, 2017-06-26 22:58ID: 1498411148563113100ROME: Italy will pay up to €17 billion ($19 billion) to rescue two Venetian banks that are facing bankruptcy, the government said on Sunday.“The total resources mobilized could reach a maximum of €17 billion — but the immediate cost to the state is a little more than €5 billion,” said Finance Minister Pier Carlo Padoan.After Brussels had, last week, firmly placed the liquidation ball in Rome’s court, Padoan’s ministry said Friday night the government would put up around €10 billion of state cash to rescue the stricken Banca Popolare di Vicenza and Veneto Banca.Both face bankruptcy and European authorities had urged Italy to devise a rescue framework, selling off their good assets and transferring toxic assets to a “bad bank,” essentially financed by Rome.Padoan said about €4.8 billion would be set aside immediately to “maintain capitalization” of retail bank Intesa Sanpaolo, which had made that a condition of any cooperation.Intesa, Italy’s biggest retail bank, has put one symbolic euro on the table and attached a further string to the deal by insisting its share dividend policy remain unaffected.Rome will provide a further “guarantee” of €400 million, Padoan said, with the remaining cash going to cover a huge hole due to bad loans.“This decree allows the stabilization of the Venetian economy and safeguarding of the economic activity of the Venetian banks,” Padoan said.
Main category: Business & Economy

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