Italy bails out two more banks with €17bn rescue deal
Larger banking group Intesa Sanpaolo will take on parts of the banks that can be saved
Italy has been granted permission to step in and save two more of its regional banks at a potential cost of as much as €17bn (£15bn).
For a nominal sum of €1, national banking group Intesa Sanpaolo will take on the parts of Banca Popolare di Vicenza and Veneto Banca which are able to be saved.
Intesa will be handed €4.8bn to shore up its capital reserves and a further €400m to provide a buffer in case credits "turn sour", says the Financial Times.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
In reality the deal means account holders and their deposits will be moved to Intesa from today, preventing a run on the banks. Any bad loans on the books will be liquidated along with the legal entities.
Italy will bear the cost for those disposals, while €4.2bn (£3.6bn) in shareholder equity and €1.2bn (£1bn) in junior debt will also be wiped out.
Around 4,000 jobs are expected to be lost as well, says the BBC.
The core costs for the rescue - which come in addition to €3.5bn (£3.1bn) in support from a state-backed bailout fund earlier this year - will come from the €20bn (£18bn) fund set up to cope with the rescue of Monte dei Paschi di Siena.
Italy said the additional costs could reach €17bn (£15bn).
The intervention has been backed by the European Commission and follows the EU-facilitated rescue of Spanish bank Banco Popular through Santander earlier this month.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Puppet shows, pagodas and pho: a guide to Hanoi
The Week Recommends Vietnam's capital city blends the ancient with the new
By Catherine Garcia, The Week US Published
-
'There are benefits, but not acknowledging them would tell only half of the story'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
What Trump's win could mean for Big Tech
Talking Points The tech industry is bracing itself for Trump's second administration
By Theara Coleman, The Week US Published
-
TD Bank accepts $3B fine over money laundering
Speed Read The US retail bank pleaded guilty to multiple criminal charges
By Peter Weber, The Week US Published
-
FDIC chair out after toxic work culture report
Speed Read The report revealed a trend of sexual harassment and discrimination at the Federal Deposit Insurance Corporation
By Peter Weber, The Week US Published
-
Citibank to cut off online access for customers who don't go paperless
Speed Read The bank will shut off the customer's access to both their online website and mobile app
By Justin Klawans, The Week US Published
-
First Republic: will UK banks survive unscathed?
Under the Radar US shares dip after collapse of third regional bank, but experts say contagion to the UK is unlikely
By Arion McNicoll Published
-
Banking crisis: has the city weathered the financial storm?
Talking Point The financial storm appears to have abated, but no one’s ruling out more squalls along the way
By The Week Staff Published
-
Should the UK relax bank ring-fencing rules?
Talking Point Treasury minister said he hopes to ‘boost competitiveness’ in the City with easing of regulations
By Richard Windsor Published
-
Should caps on bankers’ bonuses be scrapped?
Talking Point New chancellor Kwasi Kwarteng believed to be planning contentious move to ‘boost the City’
By Chas Newkey-Burden Published
-
Labour shortages: the ‘most urgent problem’ facing the UK economy right now
Speed Read Britain is currently in the grip of an ‘employment crisis’
By The Week Staff Published