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EU rules allow for state aid to Italy's bank sector: ECB's Praet
December 14, 2016 / 6:57 PM / in 7 months

EU rules allow for state aid to Italy's bank sector: ECB's Praet

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European Central Bank executive board member Peter Praet attends the 2016 Institute of International Finance (IIF) Spring Membership meeting in Madrid, Spain, May 25, 2016.Susana Vera

FRANKFURT (Reuters) - European Union rules permit state aid to Italy's banks, and the sector needs to be cleaned up because there are too many weak lenders in a saturated market, European Central Bank chief economist Peter Praet said on Wednesday.

"Even Germany put public money into the banks at the height of the crisis," Praet, who sits on the ECB's Executive Board, told German newspaper Die Zeit. "At that time, Italy did not."

"In my view, much more important than the question of where the money comes from is that there is a clear-out in the banking sector," Praet said. "There are too many banks in Italy and they are not profitable enough."

Reporting by Balazs Koranyi, editing by Larry King

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