BREAKING NEWS

BREAKING NEWS

Italian banking crisis looms

The Italian government is reportedly ready to pump 15 billion euros into Monte dei Paschi di Siena, and other troubled Italian banks.

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Italian banking crisis looms

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The government in Rome is reportedly ready to pump 15 billion euros into Italy’s third-largest bank, Monte dei Paschi di Siena, and other troubled Italian lenders.

That is according to two sources who have spoken to the Reuters news agency.

One source said unlisted regional banks Banca Popolare di Vicenza and Veneto Banca, which were rescued this year by a state-backed fund, would also get support from the state.

At the same time Monte dei Paschi is pushing ahead with plans to raise the five billion euros it needs to avoid collapse by selling new shares to private investors, though that attempt is widely expected to fail.

Without that money it faces the risk of being wound down, potentially triggering a wider banking and political crisis in Italy.

It is not clear exactly how a state bail out would work as under European Union rules private investors are required to share in a bank’s losses.

Getting bond holders, shareholders and even account holders to contribute would be politically risky for Italy’s main ruling Democratic Party.

Italian banks are stuck with over 350 billion euros of bad loans, around a third of the eurozone’s total.