Italy Blinks and Guarantees Banca Carige’s Future Bond Issues

Italy’s populist leaders just blinked again. Faced with a potential bank failure that could wipe out thousands of depositors in deputy prime minister Matteo Salvini’s northern base, the cabinet approved state guarantees for any future bond issues by cash-strapped Banca Carige and signalled its support for a possible recapitalisation, The Irish Times reported. The ruling coalition’s anti-bank rhetoric now appears to have gone the way of last year’s pledges to defy the European Union over the budget, with the government vowing instead “to safeguard the rights and interests of savers.” Like Greek prime minister Alexis Tsipras before them, Mr Salvini, prime minister Giuseppe Conte and their anti-establishment ally Luigi Di Maio of the Five Star Movement are finding out how hard it is to live up to their campaign rhetoric when voters’ economic interests are on the line. Despite importance to its Genoa base and the surrounding region, Carige doesn’t pose a significant risk to national or regional banking systems, according to Italian and European officials. Read more