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Heat is on Italy's struggling banks

Thursday, June 08, 2017 - 01:30

Italian banks are considering assisting in a rescue of troubled lenders Popolare di Vicenza and Veneto Banca by pumping 1.2 billion euros ($1.4 billion) of private capital into the two regional banks, sources familiar with the matter said. Sara Hemrajani reports.

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It's been on the back burner, but now the heat is on Italy's banking sector. Brussels would like the country to take its cues from Spain where, this week, Santander rescued its struggling rival Banco Popular. And it seems the message is filtering through. Sources say Rome is looking at a plan with Italy's stronger banks. The targets are two regional lenders: Popolare di Vicenza and Veneto Banca. The EU wants both of them to receive private funding before approving a bailout. That capital injection needs to be at least 1.2 billion euros. So far Italy's top banks have resisted being tapped again. They've already shelled out over 3 billion to the two Veneto-based firms. The fallout of years of bad debts and mounting losses. (SOUNDBITE) (ENGLISH) VICKY PRYCE, CHIEF ECONOMIC ADVISER, CEBR, SAYING: "Unless you get growth in places like Italy again, this non-performing loan issue will become even worse. So urgent action is required. So banking crisis is there, there is no doubt about it. Yes, Europe is doing reasonably well but many countries have this underlying problems that have to be dealt with and they have to be dealt with, I think, commually." Banking troubles are an ongoing problem for Italy. Last week Rome was given the green light for its proposal to save Monte dei Paschi di Siena, the world's oldest bank.

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Heat is on Italy's struggling banks

Thursday, June 08, 2017 - 01:30