UniCredit boosted its provisions for potential loan losses by €900m in preparation for a sharp economic contraction, an early indication of the severe impact the coronavirus pandemic will have on the fragile European banking system, the Financial Times reported. Italy’s largest bank by assets made the decision after estimating that the eurozone gross domestic product will shrink 13 per cent this year, before a 10 per cent rebound in 2021, according to a statement on Wednesday. It stressed that the “unprecedented situation” made financial forecasting “difficult”.

Supermarket chain Tesco is among those that have expressed an interest in Carluccio’s sites and other assets after the Italian chain collapsed into administration last month, the Financial Times reported. FRP Advisory, the insolvency specialist running the sale process, has received offers for Carluccio’s locations from Tesco, Boparan Holdings, the company behind the Giraffe and Ed’s Easy Diner chains, and Three Hills Capital, owner of the burger brand Byron, according to people with knowledge of the negotiations.

Italy’s companies and small businesses desperately need the 740 billion euros ($807 billion) the government pledged to keep the economy afloat through the pandemic recession, Bloomberg New reported. By the time the money arrives, it might be too late. Banks, which have to channel most of the aid to recipients, “have to follow standard procedures because part of the financing risk remains on their books,” said Carlo Alberto Carnevale Maffe, professor of business strategy at Bocconi University in Milan. “This normally takes weeks.

Italian government bond yields rose on Wednesday after European Union finance ministers failed to agree a rescue package to help economies recover from the impact of the coronavirus outbreak, Reuters reported. Diplomatic sources and officials said a feud between Italy and the Netherlands over what conditions should be attached to euro zone credit for governments fighting the pandemic was blocking progress on half a trillion euros worth of aid.

Italy’s government expanded its powers to block foreign takeovers and prepared a massive injection of liquidity into companies that risk bankruptcy amid the world’s deadliest coronavirus outbreak, Bloomberg News reported. Prime Minister Giuseppe Conte announced new economic measures as the country enters its fifth week of lockdown, with all non-essential businesses shuttered and still no plan to relax restrictions. Italy reported 3,599 new infections on Monday, the lowest in nearly three weeks.

Supplies to Sardinia and other Italian islands are at risk after ferry operator Moby SpA suspended some of its services, Bloomberg News reported. Italy’s officials called for an emergency meeting with administrators of Tirrenia, an insolvent company whose assets were bought by Moby in 2011, after they seized the accounts of one of the operator’s unit on Monday, according to a statement from the ministry of transport. Moby has failed to pay a deferred installment for the acquisition. The company responded to the seizure by halting ferry services, it said in an emailed statement.

Alitalia’s administrator has asked Italy’s government to raise to nearly 7,000 the number of its employees under a temporary lay-off scheme, with most of its aircraft standing idle during the coronavirus outbreak, Reuters reported. The request for 2,900 more workers to join the scheme came on Thursday in a letter sent by the state-appointed administrator to unions and government ministries and seen by Reuters. Alitalia’s total workforce is around 11,600.

Italy’s prime minister has demanded the EU use “the full firepower” of its €500bn rescue fund to confront the continent’s economic crisis, as he warned against relying on monetary policy to counter a “global shock that has no precedents,” the Financial Times reported. With coronavirus deaths in Italy overtaking those in China for the first time, Giuseppe Conte told the Financial Times it was time for the European Stability Mechanism to offer emergency credit lines to countries reeling from the pandemic.

By now it should be clear that monetary policy cannot cure coronavirus. But central bankers can certainly aggravate the market symptoms, the Financial Times reported. That is the accusation being levelled at Christine Lagarde after a remark she made last week that triggered a sell-off in parts of Europe’s bond markets. It is not the European Central Bank’s job, the president said, to “close the spread” between the bonds of different member states. Clearly, some traders thought it was, judging from the subsequent slide in Italian debt.

As Italy confronts the ravages of an unexpected threat in the coronavirus, fears are intensifying that the economic damage could trigger a far more familiar danger — a banking crisis, the International New York Times reported. Italy’s banks and their formidable piles of bad loans have long constituted a central worry in an economy that has not grown in more than a decade. The nation’s lenders are at once big enough, sufficiently integrated with the world, and adequately shaky to pose a constant menace to the global financial system.