November 9, 2018 / 7:55 AM / in 8 months

Italian banks to inject fresh money into deposit guarantee fund-Il Messaggero

MILAN, Nov 9 (Reuters) - Italy’s top five banks have agreed to inject an extra 2.75 billion euros ($3.12 billion) into an interbank deposit protection fund (Fitd), to strengthen support for weaker lenders in case of market turmoil, Italian newspaper Il Messaggero reported on Friday.

Yields on Italian government bonds and their spread over German debt have risen sharply in recent months after the Italian government said it would increase spending and thus widen the country’s deficit, putting it on a collision course with the European Commission.

That has fuelled speculation on the soundness of Italian banks given their large holdings of Italian government bonds.

According to the paper, Intesa Sanpaolo, UniCredit , Banco BPM, Ubi Banca and Banca Monte dei Paschi di Siena agreed in principle to contribute 550 million euros each to the fund.

Intesa Sanpaolo declined to comment, while the other four banks were not immediately available for comment when contacted by Reuters.

The newspaper also said other banks were looking to contribute to the fund and that they had until Nov. 24 to join, adding that initiative had the blessing of Bank of Italy.

In the event of a bank failure, Ftid has a mandate to guarantee bank deposits for up to 100,000 euros. ($1 = 0.8819 euros) (Reporting by Giulio Piovaccari; Editing by Kirsten Donovan)

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