ROME (Reuters) - Losses for the Italian state will be limited in a deal unveiled on Sunday to liquidate two ailing regional lenders, a senior Bank of Italy official said, adding the state may even eventually make a profit from it.
Italy began winding up two Popolare di Vicenza and Veneto Banca on Sunday in a deal that leaves the lenders’ good assets in the hands of the nation’s biggest retail bank, Intesa Sanpaolo (ISP.MI).
The government will pay 5.2 billion euros (4.57 billion pounds) to Intesa, and give it guarantees of up 12 billion euros, so that it will take over the remains of Popolare di Vicenza and Veneto Banca, which collapsed after years of mismanagement and poor lending.
However, Bank of Italy officials said the final bill for the state would be small and some money could be recovered from the management and sale of the two banks’ bad loans.
“The state could even end up not losing a penny, and even if it did it would be for a limited amount,” Bank of Italy’s Chief Supervisor Carmelo Barbagallo told a press briefing on Monday.
He said that under the deal the state would take on 11.7 billion euros in assets to be liquidated, consisting of 10 billion euros in net soured debts and around 2 billion euros in financial assets.
Confirming a Reuters report, Bank of Italy’s Deputy Governor Fabio Panetta said at the same briefing that a group of investment funds had expressed an interest for the two banks in recent weeks but their offer was rejected by the EU Commission.
Panetta said the solution found removed significant elements of “systemic tensions” for Italian banks.
Reporting by Stefano Bernabei, editing by Valentina Za