Italian PM claims banks are fine, wants to avoid EU ‘bail-in’

Rome, Aug 2 (IANS/AKI) Italy’s banks are solid, Premier Matteo Renzi claimed on Tuesday, saying he wanted to avoid a European Union bail-in or the use of creditors’ or depositors’ money to restructure lenders.

“My view is that Italian banks are good,” Renzi told US broadcaster CNBC.

His comments came as trading in shares in several banks was halted during the second day of turmoil on the Milan stock following results of European stress tests last week which have spooked investors.

“For me Italy is totally fighting to avoid bail-in because even a soft bail-in could be a disaster for credibility and of course for confidence,” Renzi said.

Using the EU bail-in rules now could expose Renzi to political risk ahead of a crucial referendum later to create more stable government and streamline lawmaking. He has staked his job on the vote.

Renzi told CNBC he was satisfied with a privately-funded bail-out plan announced on Friday by Italy’s most troubled bank, Monte dei Paschi di Siena, just hours after it came bottom of 51 lenders tested by the European Banking Authority.

“If now, without bad loans, with a clear strategy, I think this bank could be a very good bank for the future,” said Renzi.

He called MPS – the world’s oldest lender which was founded in 1472 – “a brand”.

Italy’s largest lender Unicredit was ranked as one of the five weakest European banks in the stress tests and was especially badly hit by share sell-offs this week. It scraped through Friday’s stress tests and needs fresh funds, either through recapitalisation or the sell-off of assets.

Italian banks are weighed down by bad loans, the legacy of Italy’s longest post-war recession and poor management decisions, according to analysts.

–IANS/AKI

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