by Anthony B. Sanders
Anthony B. Sanders’ Blog
Bloomberg had an interest piece on the EU’s inflexible bank rules regarding Italian banks.
Italy’s non-performing loans at over 20 percent of GDP and the country’s public debt at over 130 percent of GDP, Prime Minister Matteo Renzi is running out of time. An EU-approved plan earlier this year to restructure the banks through the state-backed rescue fund Atlante has stalled. With only 4.25 billion euros ($4.8 billion), against 360 billion euros of troubled loans, the rescue fund always looked too small; it has failed to attract sufficient private money. Should Italian depositors lose confidence in their banks, still a very real possibility, the chaos would not only risk a financial collapse in Italy, but would spread through the euro zone. Shares in troubled lender Banca Monte dei Paschi di Siena is down 20 percent this week, with Italy’s La Stampa newspaper reporting Tuesday that the government is considering a new rescue plan.