EU regulators veto rescue of Italy’s Banca Tercas
ROME: Last year’s rescue of Banca Tercas, a small Italian lender, was declared illegal by European Union (EU) regulators on Wednesday, opening up a possible fresh avenue of confrontation between Rome and Brussels.
In July 2014, Tercas received € 300 million (RM1.4 billion) from a deposit guarantee fund, which is financed by other Italian banks, to put an end to its crisis and ease its incorporation into Banca Popolare di Bari.
Even though the operation was funded by private capital, an investigation established that it was directed by public authorities and thus violated EU rules against state aid, the European Commission said in a statement.
The ruling means that the € 300 million will have to be given back. But the Italian Economy Ministry said “the negative consequences” of the decision were going to be “neutralised,” by another “completely voluntary” aid package for Tercas funded by fellow Italian banks, which should provide the cash for the necessary refund.
The Italian government, which engineered the privately-funded salvage of four other small lenders in November, has recently criticised what it sees as the EU executive’s inflexible approach towards banking sector rescues.
The commission is implementing new regulations stating that banks should be rescued by shareholders and other investors, rather than taxpayers.
For Rome, such an approach puts at risk too many people’s savings, creating the risk of a wider banking crisis. – dpa