June 29, 2017 / 10:05 AM / a year ago

Padoan defends Italy's use of taxpayers' money to wind up two banks

BERLIN, June 29 (Reuters) - The costs of Italy’s decision to wind down two failed regional banks pale in comparison with the large sums that Germany and Britain pumped into their financial sectors after the 2008 crisis, said Italian Finance Minister Pier Carlo Padoan.

Writing in German weekly magazine Wirtschaftswoche, Padoan defended Italy’s decision to wind down the two collapsed banks at a possible cost of up to 17 billion euros, saying the intervention saved the economy of the Veneto region.

German Finance Minister Wolfgang Schaeuble and Bundesbank president Jens Weidmann have both bemoaned Italy’s decision, which was approved by the European Commission and involves the state rather than investors bearing most of the cost.

This goes against the spirit of a framework known as the banking union.

“The banking union was adopted and devised after many countries put enormous amounts of tax payers’ money into the stabilisation of their banking sectors,” Padoan wrote. “We are talking about hundreds of billions in Germany and Britain.” (Reporting by Joseph Nasr)

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