The European Commission chiding member states for missing their fiscal targets has become a familiar part of the EU policy apparatus, together with its failure to follow through with sanctions when miscreant governments fail to comply, the Financial Times reported. The process of disapproval without consequences is in train once again in Italy, a country with more than its fair share of fiscal problems down the decades.

Banca Monte dei Paschi di Siena, the beleaguered Italian lender, said on Tuesday that it would slash jobs, close branches and sell some businesses as it seeks to convince investors to back its plan to raise new capital, the International New York Times reported. The latest turnaround plan, unveiled by the new chief executive, Marco Morelli, comes at a critical time for the bank, which was the worst performer in stress tests conducted this year by the European Banking Authority, which regulates lenders in the European Union.

Tension between Brussels and Italy over the country’s 2017 budget escalated on Tuesday after the European Commission imposed a 48-hour deadline on Rome to explain why it was breaking previous fiscal agreements, the Financial Times reported. Matteo Renzi, Italy’s prime minister, in effect, dared the commission last week to challenge him over a budget proposal that scraps the deficit reduction targets to which the country had committed itself this year.

The European Union must choose between letting Rome hike its budget deficit to cope with the costs of migrants and an earthquake, or siding with the “Hungarian way” of building barriers, Italy’s economy minister said, the Irish Times reported. The Italian government has been stepping up anti-Brussels rhetoric after announcing an expansionary 2017 budget plan on October 15th ahead of a referendum on constitutional reform that may decide prime minister Matteo Renzi’s political future. “Europe must choose which side to take.

Investors are reluctant to back Monte dei Paschi di Siena's bid to raise billions of euros, leading fund managers and a source with knowledge of the matter told Reuters, posing a huge challenge for a new CEO seeking to save the Italian bank. The lender, which is expected to name a new chief executive on Wednesday, must raise up to 5 billion euros ($5.6 billion) as part of an emergency rescue plan to stave off the risk of being wound down and a wider banking crisis that would send shockwaves across Europe.

Banca Popolare di Bari is poised to test Italy's new bad loan guarantee, but questions remain over whether it can pave the way for other banks seeking to securitise soured debt, Reuters reported. Earlier this month, Bari announced it had structured a 140.5m securitisation backed by non-performing loans, which it plans to sell to the public market with the help of Italy's new state guarantee, known as Gacs.

As Italy and Europe more broadly struggle to come to grips with an escalating problem with bad loans, a new paper by economists connected to the Center for Economic Policy Research, a European policy shop, highlights the extent to which Italy’s main banks — known to be the weakest in the eurozone in terms of cash reserves — have stepped up their lending to the country’s most troubled companies, the International New York Times DealBook blog reported.

The best that can be said for Italy’s latest plan to rescue its third-largest bank is that it might just work, The Wall Street Journal reported. Monte dei Paschi di Siena announced on Friday a complex deal that would see it offload €40 billion ($44.7 billion) of its most toxic bad debts—equivalent to around 15% of its loan book—into a newly created privately-funded vehicle, paving the way for the lender to raise around €5 billion in fresh capital.

Over dinner with reporters at an upscale Roman hotel in November, Pier Carlo Padoan, Italy’s finance minister, was asked what he would do if he had a magic wand to help his country’s sluggish economy. The answer was telling: he would wipe away the huge stock of non-performing loans that had accumulated on the balance sheets of Italy’s banks during the recession.

Italy was last night racing to secure a privately backed bailout of Monte dei Paschi di Siena, the most exposed of the country’s troubled lenders, including a plan to raise €5bn of fresh capital so as to avert nationalisation, according to bankers and European officials, the Financial Times reported.