Italy

Banca Monte dei Paschi di Siena has confirmed the European Commission has given formal approval for its five-year restructuring plan, a move paving the way for the Italian state to take over the lender. The backing by the EU starts a precautionary recapitalisation of up to €8.8bn, removing a significant weight from the Italian financial system, the Financial Times reported. Monte Paschi has weighed on Italian banking stability since the European sovereign debt crisis.

The state-backed rescue of Banca Monte dei Paschi di Siena SpA may be approved by the European Commission as soon as today, completing a six-month review of the restructuring of the world’s oldest bank, according to people familiar with the matter. EU approval would pave the way for a precautionary recapitalization of the lender, making it the third Italian bank to obtain state aid this year, Bloomberg News reported.

Finance Minister Pier Carlo Padoan on Thursday defended Italy's closure of two failed regional banks using public funds, saying the costs pale in comparison with the large sums that Germany and Britain pumped into their banks after the financial crisis, Reuters reported. Writing in German weekly magazine Wirtschaftswoche, Padoan said the decision to wind down the two banks at a possible cost of up to 17 billion euros was a necessary intervention to save the economy of the Veneto region.

Italy’s north-south disparity is one of its best-known economic problems — but awareness of the issue does not seem to make it any easier to solve. As the eurozone economy recovers, the Financial Times has analysed greenfield investment data for Italy, one of the bloc’s growth and employment blackspots. The analysis shows that Italy’s attractiveness to foreign investment has increased in the past year but still lags behind most of its peers, the Financial Times reported.

To keep senior bondholders happy as they rescued two failed banks over the weekend, Italian regulators found an elegant solution: they put them beyond the reach of EU law, Bloomberg News reported. That’s no cause for celebration, according to Paul Smillie, a Singapore-based analyst at ColumbiaThreadneedle, which manages about $467 billion globally including bank bonds of peripheral nations that rallied following the news. Instead, the decision revives concerns that the market for European bank debt might be ruled by the vagaries of individual political systems.

The head of Italy's BIM said on Monday he was confident the private banking group would be sold on the market quickly following the decision to liquidate its main shareholder Veneto Banca, Reuters reported. "We had started work to create a bank that was independent and able to become a high-end private banking pole. We will now restart that project...," CEO Giorgio Girelli told Reuters. On Sunday the Italian government approved a decree to wind down regional lenders Veneto Banca and Banca Popolare di Vicenza which collapsed after years of mismanagement and poor lending.

Italy will take the next step to wind down two failed banks in the northern Veneto region when the government meets to adopt a plan that may smooth the sale of the stricken lenders’ assets to another firm, Bloomberg News reported. The Finance Ministry said late on Friday that all measures would be taken to ensure that senior creditors and depositors of Banca Popolare di Vicenza SpA and Veneto Banca SpA would be protected in a wind-down under the national insolvency law, and customers would see no interruption in service.

The board of Intesa Sanpaolo has said conditionally agreed to buy parts of troubled Italian banks Banca Popolare di Vicenza and Veneto Banca in a move that should help stave off fears about the stability of the country’s banking system, the Financial Times reported. In a statement on Wednesday, Intesa – which is considered one of Italy’s healthiest banks – said it would approve a deal to buy the “good” assets of its troubled smaller rivals on the condition it have no impact on its core capital ratio or dividend policy.

Italy has hired Rothschild to find buyers for the best assets of two ailing Veneto-based lenders, with Intesa Sanpaolo viewed as the most likely taker, said several sources close to the situation. The move is part of a new plan by the Rome government that envisages the effective liquidation of Banca Popolare di Vicenza and Veneto Banca with the help of state money to reduce losses for the lenders' private investors, the International New York Times reported on a Reuters story.

Italy’s finance minister has said a “solution” to rescue two struggling banks in the north-east Veneto region — Banca Popolare di Vicenza and Veneto Banca — is close and talks with EU authorities are “encouraging,” the Financial Times reported. The statement by Pier Carlo Padoan comes as Italy’s largest domestic lender Intesa Sanpaolo on Tuesday morning held a board meeting to discuss joining a consortium of Italian lenders — including UniCredit — to provide €1.2bn for the Veneto banks and pave the way for a state-led rescue of the two lenders, say people involved.