The approval of a bailout with public money from the Bank Monte dei Paschi di Siena and marks the beginning of a delicate operation to save the entire banking system of Italy, one of Europe’s weaker because of billions in questionable loans.
The approval of a bailout with public money from the Bank Monte dei Paschi di Siena and marks the beginning of a delicate operation to save the entire banking system of Italy, one of Europe’s weaker because of billions in questionable loans.
The Italian government adopted during an extraordinary meeting by a decree that authorizes the minister of the Treasury to become the largest shareholder of the Bank Monte dei Paschi di Siena (BMPS), the oldest bank in the world, founded in Tuscany during the Middle Ages.
The decision was taken after the failure of the entity in its attempt to capture the 5,000 million euros needed for recapitalization.
"The operation could not be performed due to missing investors to serve as anchor, which caused also a decrease of orders by institutional investors," he explained in a letter to employees Marco Morelli, head of the Italian bank.
After a Council of Ministers, urgent, Paolo Gentiloni, head of the government, passed a decree, ratified subsequently by the Parliament, for the creation of a fund of 20,000 million euros for the bailout of the banks, including BMPS, which will result automatically in an increase of the public debt.
According to Morelli, "the role of the State was not the first choice for the bank, but allows you to continue with the plan of disposal of nonperforming loans," he said.
To Gentiloni, the rescue plan, which european officials know, protects "100%" of the savers.
About 40,000 people have bonds of Monte dei Paschi and many bought them without knowing the risks.
The European Commission indicated that it shall monitor compliance with the rules, and to protect in particular small savers.
The government has not revealed the amount of assistance to be awarded, although Pier Carlo Padoan, minister of Finance, assured the press that "it will be enough."
The Monte dei Paschi Bank, which is the third financial institution, Italian, generated from months ago concern throughout the banking system because of the questionable loans, which will probably never be paid.
Gentiloni praised "the plan" drawn up to reassure the noteholders and at the same time to ensure a future to the bank of tuscany.
it Is only the start
For the experts, this is only the beginning of a massive rescue operation. "The rescue of the bank of Tuscany, the title of which is suspended on the Stock exchange, is the first of a series of similar actions that will be taken to save banks in crisis and that they are going to absorb the 20,000 million budgeted," says Ugo Bertone, page FirstOnline financial information.
According to the expert, among the banks that are at risk include Popolare Vicenza, Veneto Banca, the bank Carige and the other four that are in the course of recovery (Popolare dell Etruria, Carife, Carichieti and Banca delle Marche).
The Monte dei Paschi navigate in turbulent waters for years. Weakened by the disastrous acquisition of bank Antonveneta in 2007 and by an embezzlement scandal, has accumulated losses (14,000 million euros between 2011 and 2015) and has made two capital increases, by a total of 8,000 million euros, money that has already fizzled out.
At the end of July, the bank announced a new recapitalization, of the 5,000 million euros, accompanied by a vast transfer of delinquent loans, the elimination of 2,600 jobs and the closure of one-fourth of its agencies.
The banking sector Italian concern for Europe due to its fragmentation, with 700 sites, the large number of questionable loans (360,000 million euros, almost a third of the total of the euro zone) and their insufficient capitalization.
last year, the rescue with public funds of four small banks resulted in heavy losses for thousands of savers, which caused protests and at least one suicide.
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