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Italy referendum: Renzi, banks at risk

Friday, December 02, 2016 - 01:36

Italy's battered banks could be a casualty alongside prime minister Matteo Renzi if this Sunday's constitutional referendum triggers a government crisis. Laura Frykberg reports.

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There's just a few days left. And the stakes couldn't be higher. On Sunday Italians vote on whether to shakeup their government. Increasingly, polls predict they'll vote no. Prime Minister Matteo Renzi threatened to quit if that happens. But even if he doesn't, it could create major political uncertainty - and spill over into another sector in crisis. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "The Italian banking sector is sick. It has something like 360 billion euros of non-performing loans and 220 billion euros of equity, so there is a giant black hole right there." Eight of Italy's banks desperately need capital. The most pressing need is Monte Dei Paschi. Which requires five billion euros from markets by next week. Reports suggest the government is already discussing a bailout with the European Commission. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "It feels very much as if any solution to Italy's banking crisis is going to have to come from beyond Italy's borders, it is almost certainly going to have to be a euro zone wide issue." There are fears that could create a domino effect. Not to mention the current political one creeping across Europe. The head of Italy's anti-immigrant Northern League party has said he'll stand for Prime Minister if Renzi resigns. One of his many pledges is to leave the euro zone. Not matter what Italy may owe it.

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Italy referendum: Renzi, banks at risk

Friday, December 02, 2016 - 01:36