Italy

Italy's new government approved a new decree Friday aimed at staving off a default by the city of Rome while insisting that the capital must still seek ways to curb its perennial deficit, The Wall Street Journal reported. The new decree, which must be approved by parliament, offers €575 million ($788.32 million) in cash, which will cover more than half the capital's 2013 shortfall. That is more than the amount pledged by the previous government's so-called "Save Rome" decree, which languished in parliament until being withdrawn earlier this week due to a parliamentary filibuster.

When Michele Alessi saw orders drop at his namesake kitchenware designer he paid his staff to sweep streets and prune trees rather than have them stay home tapping a state-backed layoff fund, Bloomberg News reported. Alessi, 63, whose company makes humorous designer kitchen tools like a Philippe Starck-sketched juicer in the form of a giant spider, takes a dim view of the employer tax-funded layoff program because “it sends the wrong message,” he said in an interview in Milan on Jan. 22.

Banca Monte dei Paschi di Siena SpA, the bailed-out Italian bank, will delay a 3 billion-euro ($4.1 billion) stock sale until at least May from the first quarter after its biggest shareholder demanded a postponement, Bloomberg News reported. The bank’s investors backed the delayed rights offer at an extraordinary shareholder meeting in Siena on Dec. 28, according to Monte Paschi Chairman Alessandro Profumo. The vote ends a clash between the lender and its main shareholder over the timing of the offering.

UniCredit SpA said today that it has reached an agreement to sell almost €1 billion ($1.37 billion) in nonperforming loans to Cerberus European Investment LLC, the Wall Street Journal reported today. The Italian bank said that the sale was part of its continuing effort to bolster its credit profile by disposing of noncore assets and that it expected to close the deal by February 28. The sale relates to consumer and personal loans with a total gross value of €950 million. The Italian bank said it had a coverage ratio for eventual potential losses on the loans of more than 90 percent.

Alitalia SpA succeeded in raising enough money so Italy's post office will invest in the airline, increasing the likelihood that it will have sufficient capital to keep flying for at least a year as it looks for a partner to ensure its long-term survival, The Wall Street Journal reported. Alitalia, which nearly went bankrupt in October, has raised €225 million ($308 million) from shareholders and creditors, a person familiar with the situation said Monday. That amount was the minimum that Poste Italiane SpA had set as a condition for it to invest €75 million in the airline.

Pietro Fattorini, owner of a marble company in the eastern Italian region of Marche, recently filed for bankruptcy protection. But it isn't for lack of demand. The 23-year-old company he founded has plenty of orders from overseas clients, The Wall Street Journal reported. Mr. Fattorini's problem is much closer to home. His longtime bank, Banca Marche, lost more than €750 million ($1.01 billion) in 2012 and the first half of this year. As a result, the bank cut his credit lines last year, choking off the funds he needs to survive.

Loss-making Alitalia has yet to raise all of the 300 million euros ($407 million) it was seeking in an emergency cash call, piling more pressure on the Italian airline and find a strategic investor to keep it flying, Reuters reported. Alitalia said on Thursday it had received 173 million euros by a deadline for existing shareholders to subscribe to its cash call via pledges and bank guarantees and expected to raise the rest from the state-owned postal service and other investors.

Banca Monte dei Paschi di Siena SpA is seeking to return to profit after cutting costs and raising capital as part of the bailed-out Italian bank’s restructuring plan, Bloomberg reported. Monte Paschi targets net income of 200 million euros ($272 million) in 2015 and 900 million euros in 2017 after shedding 8,000 staff, selling 3 billion euros of new shares and shrinking its balance sheet by 25 percent, Italy’s third-biggest bank said in a statement yesterday. The lender’s plan, which received European Union approval Nov. 27, will allow it to repay 4.1 billion euros of state aid by 2017.

Italian banks are preparing to sell nearly a quarter of their problem loans by 2017 thanks to a balance sheet clean-up spearheaded by the Bank of Italy that is tempting specialist investors back into the market, Reuters reported. Bad debts held by Italian banks have doubled since 2010 to 145 billion euros ($196 billion), a product of the country's longest recession in 60 years. But this has also exacerbated the country's economic plight as banks have had to set aside more cash for bad loans rather than lend to companies and consumers.

The staggering tax burden is a big part of the reason Italy's output has grown the least over the last decade of any of the 34 countries in the Organization for Economic Development and Cooperation, The Wall Street Journal reported. Now with the economy still sputtering and jobless rates at their highest since the 1970s, there is growing apprehension at home and abroad that Italy's tax model is crushing the country's prospects for recovery.