Italy

Bank of Italy Governor Ignazio Visco has renewed his call for a review of European rules on banking crises that limit the ability to help ailing lenders, Bloomberg News reported. “A legislation initiative of the new European Commission to review the BRRD directive would represent the occasion to tweak current rules, in order to make the regulation framework more flexible and appropriate for the nature of the banking industry,” Visco, who also sits on the European Central Bank’s Governing Council, said in a Friday speech to Italy’s bankers in Milan.

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A state-backed plan to revive Italy’s sickly construction industry through a series of mergers could take a step forward next week when its biggest builder, Salini Impregilo, expects to approve a takeover bid for its nearest rival, Reuters reported. Known as “Project Italy”, the joint public-private initiative has evolving for months in response to an industry crisis that has sent about 120,000 firms broke over the past decade and saddled others with crippling debts.

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For investors in Italian debt, the round-trip is complete. Government bonds have climbed back to levels previously seen before the election that brought a populist coalition to power last year. Borrowing costs had spiked in May 2018 after the government’s spending plans set it on a collision course with EU leaders. Italy’s 10-year yield rose as high as 3.5 per cent, in a worrying echo of the depths of the sovereign debt crisis. That now feels like a distant memory, the Financial Times reported. Italian 10-year yields have tumbled nearly 2 percentage points since October.

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Let this sink in for a minute: Yields on two-year Italian government bonds briefly fell below 0% on Tuesday. That's right - for a moment, investors decided it was just fine to pay Italy for the privilege of lending it money, even though barely a month ago the country was on the verge of a fiscal crisis so bad some wondered whether it would be need to leave the euro zone, a Bloomberg View reported. It matters little that yields ended the day on the right side of zero at 0.02%, but even that shows how the “greater fool” theory in markets has gone too far.

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Rome’s populist government has revised its ambitious spending plans in an effort to avert EU budget sanctions. Italy’s rising debt burden — at 132 per cent of gross domestic product the second-highest in the eurozone — is in breach of EU budgetary rules, according to an assessment by the European Commission last month, putting it at risk of becoming the first country to incur financial penalties, the Financial Times reported. Ministers reached an agreement on Monday evening on a law to adjust the budget in the hope of averting an excessive deficit procedure (EDP) by the EU.

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German Efromovich, the ousted chairman of Colombian airline Avianca, is eyeing a comeback via Italy. Efromovich wants to buy a stake in the bankrupt Italian flag-carrier Alitalia SpA, financial daily Il Sole 24 Ore reported, citing a phone interview, Bloomberg News reported. "We wrote a letter to Ferrovie dello Stato and the adviser Mediobanca two weeks ago saying we can purchase up to 30% of Alitalia," said Efromovich, who was removed as the chairman of Avianca Holdings SA last month after a loan breach.

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The EU is in a state of suspended animation over Italy’s budgetary woes. Wednesday was supposed to be the day when Brussels gained clarity over Rome’s intentions to step back from deficit-busting spending measures and avoid falling into an EU disciplinary process, the Financial Times reported. But clarity, there came none. Italy’s fraying anti-establishment coalition — which is divided between budget moderates and hardliners — decided on Wednesday to delay formally setting itself a lower deficit target for 2020.

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The European Commission could give Italy until January to make fiscal policy changes under an EU debt procedure, minutes of an EU meeting show, setting a relatively long deadline to help avert fines and any backlash from Rome’s eurosceptics, Reuters reported. Unless the government makes concessions this week on its spending plans for 2019 and 2020, the EU executive is expected to propose on July 2 that a disciplinary procedure be opened over Italy’s rising debt.

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Italy risks further infuriating European Union finance chiefs after Prime Minister Giuseppe Conte said he was in favour of a broad reform that would cut taxes, Express.co.uk reported. As the two sides brace to collide yet again, Mr Conte said he agree with deputy prime minister and far-right leader Matteo Salvini, who is calling for significant tax cuts. Mr Salvini has threatened to bring down the Italian government should his proposals not be met.

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Dubai developer Damac is in pole position to buy troubled Italian fashion group Roberto Cavalli, a source close to the matter said on Wednesday, Reuters reported. Two other binding offers for the whole group have been submitted by Italy’s Diesel-owner OTB and U.S. brand management company Bluestar Alliance, the source said. Last Friday Cavalli said it had received five offers for the brand. The company and its private equity owner Clessidra both declined to comment.

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