Italy to pay up to $19bn to save two troubled banks

ROME: Italy will pay up to €17 billion ($19 billion) to rescue two Venetian banks that are facing bankruptcy, the government said on Sunday.

“The total resources mobilized could reach a maximum of €17 billion — but the immediate cost to the state is a little more than €5 billion,” said Finance Minister Pier Carlo Padoan.

After Brussels had, last week, firmly placed the liquidation ball in Rome’s court, Padoan’s ministry said Friday night the government would put up around €10 billion of state cash to rescue the stricken Banca Popolare di Vicenza and Veneto Banca.

Both face bankruptcy and European authorities had urged Italy to devise a rescue framework, selling off their good assets and transferring toxic assets to a “bad bank,” essentially financed by Rome.

Padoan said about €4.8 billion would be set aside immediately to “maintain capitalization” of retail bank Intesa Sanpaolo, which had made that a condition of any cooperation.

Intesa, Italy’s biggest retail bank, has put one symbolic euro on the table and attached a further string to the deal by insisting its share dividend unaffected.

Rome will provide a further “guarantee” of €400 million, Padoan said, with the remaining cash going to cover a huge hole due to bad loans.

“This decree allows the stabilization of the Venetian economy and safeguarding of the economic activity of the Venetian banks,” Padoan said. policy remain