Renzi seeks green light to help Italy's banks
The European Commission and Italy are floating ideas on a possible bail-out of the country’s banks.
Turmoil on global markets following Britain's vote to leave the EU hit hard against Italian banks, which are already struggling under the weight of €360 billion in bad loans, sluggish economic growth and record low interest rates.
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Euro and finance commissioner Valdis Dombrovskis told Bloomberg on Tuesday (28 June) that the EU’s executive arm was closely monitoring the situation of Italian banks and is in contact with Italian authorities about possible measures.
Rome is considering shoring up banks with up to €40 billion to save shareholders and junior creditors from taking the losses.
But the bailout of bank creditors would be contrary to new EU legislation, which aims to avoid that tax payers bear the brunt of bad banking policies.
Commission president Jean-Claude Juncker added later that day that his team would do everything to avoid a run on Italian banks.
“This is not a danger for Italy for the time being,” Juncker told journalists, ”but we have to make sure given the uncomfortable global circumstances we are in that the banking sector in Italy and elsewhere will be protected in the best way possible”.
Italian prime minister Matteo Renzi said the talks were not yet formal negotiations.
He hopes to persuade the commission that Brexit opened up “exceptional circumstances” that would justify the measure.
The Italian parliament is meanwhile clearing legal hurdles for the legislation.
Dombrovskis declined to elaborate on the talks or the way the EU is leaning.