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.
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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.
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