Lost in translation

8 June 2017 By Neil Unmack Follow @unmack1

Italy’s big banks may pump 1.2 bln euros into small lenders to help enable a government rescue. The banks see a bailout as the least bad option. Yet after the failure and resolution of Spain’s Banco Popular, it’s a backward step that punishes good banks for the sins of others.

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Italian banks may invest 1.2 billion euros in two troubled lenders as part of a government-backed rescue, Reuters reported June 8.

Under the plan, banks would contribute to the bailout in proportion to their share of the country’s deposit base. The two banks, Banca Popolare di Vicenza and Veneto Banca, will then seek a 6.4 billion euro precautionary recapitalisation, with the Italian government putting up the remainder of the funds.

Italian banks have already invested 3.4 billion euros in the two lenders last year through the Atlante fund, after they failed to raise capital in public markets.

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