September 26, 2017 / 3:21 PM / a year ago

Italy Senate votes to crack down on executives of failed banks

ROME (Reuters) - Italy’s Senate voted unanimously on Tuesday to toughen sanctions on executives of failing banks, following several large government pay-outs to keep struggling lenders from imploding.

Opposition parties and a breakaway left-wing movement voted with Prime Minister Paolo Gentiloni on the motion, in a good sign for the government which has a narrow majority in the Senate. The same house is due to vote on a key 2018 budget document next week.

The motion, which is now formally approved, commits the government to bring in quick legislation on the responsibilities of bank managers, making it easier to ban them from public office or professional roles if they are found guilty of wrongdoing.

A series of rescues have turned public opinion against Italy’s banks in recent years, and a investigative committee is due to meet for the first time on the issue later this week.

Bailing out the world’s oldest bank, Monte dei Paschi di Siena, and two smaller lenders in the Veneto region has cost the state more than 10.2 billion euros (8.95 billion pounds)this year, according to a draft of the budget document.

In 2015, thousands of retail investors lost savings they had invested in four small lenders, shaking a huge network of local banks that served as financiers and advisers to families around the country for decades.

Among the 196 senators who voted for the motion were members of the small Democratic and Progressive Movement (MDP), whose split from the ruling Democratic Party (PD) in February eroded the government’s already slim upper house majority.

MDP said earlier this month it would not promise to vote for the budget after the government rowed back on a planned law that would grant citizenship to the children of immigrants.

The government drew up the motion based on proposals put forward by parliamentary groups.

Reporting by Giuseppe Fonte, Writing by Isla Binnie; Editing by Andrew Heavens

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