BERLIN (Reuters) - European Central Bank policymaker Jens Weidmann has said state involvement in the rescue of Italian banks can’t be ruled out, piling further pressure on the Rome government to bail out Monte dei Paschi di Siena (BMPS.MI).
“The participation of the state alongside investors in a crisis solution can never be excluded,” Weidmann told the Frankfurter Allgemeine Zeitung’s Sunday edition.
Weidmann, the hawkish president of Germany’s Bundesbank, did not mention Monte dei Paschi di Siena, Italy’s third-largest bank and the world’s oldest, by name in the newspaper interview.
His comments came after Reuters reported on Friday that the ECB rejected a request by Monte dei Paschi for more time to complete an ambitious, 5 billion euro (£4.2 billion) cash call - a decision that put pressure on Rome to bail out the lender.
Since the 2007-09 financial crisis, the European Union has adopted rules that make state aid a last resort when it comes to helping troubled banks.
Weidmann justified state involvement by arguing that “investors particularly worthy of protection” had to be spared, the newspaper reported.
The paper reported Weidmann as saying he could imagine targeted state transfers to investors who had wanted to buy conservative financial products, but quoted him as adding: “The bail-in rules should not be softened.”
In a bail-in, creditors and depositors take a loss on their holdings
Writing by Paul Carrel; Editing by Ros Russell