07-23-2016, 07:39 AM
The bank fund set up by Italian financial institutions to help weaker, smaller lenders is a "private sector initiative" and "market-based" as far as intervention is concerned, Italy's finance minister said on Thursday, keen to stress that the deal involves no state aid. Italy agrees $5.7B fund to rescue weaker lenders "It's not a bailout. It's a vehicle," Pier Carlo Padoan told CNBC on Thursday. The fund is a private-sector initiative to buy up struggling Italian lenders' bad loans and was set up in response to growing concern over the country's banking sector. Shares in Italian banks have fallen sharply since the start of the year as fears over non-performing loans on their books grew. The fund is an attempt at easing those fears, and Italy is keen to present it the fund as privately run to avoid scrutiny from European Union regulators who could argue that it amounts to state aid.
Italy bank fund ‘no state aid, not a bailout’: FinMin
European Central Bank President Mario Draghi weighed in–ever so tentatively–on behalf of his compatriot Matteo Renzi Thursday in a simmering row over how to fix Italy’s broken banks. In an otherwise low-key press conference, Draghi said that the availability of state bailouts to recapitalize banks was an important part of solving the problem of non-performing loans and restoring banks to a position where they could lend more freely to creditworthy customers. “A public backstop is a measure that would be very useful,” Draghi said, although he made sure to qualify his comments by listing other essential measures. A furious ideological row is brewing between Italian Prime Minister Matteo Renzi and the European Commission over the issue.
The ECB Just Backed Matteo Renzi in Italy's EU Bank Bail-in Dispute