16
Dec
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Italian Government Set to Support Ailing Banking Sector With €15 Billion

Italy's banking sector is saddled with 356 billion euros of bad loans, around a third of the euro zone's total. Monte dei Paschi di Siena the country's third-largest lender is pushing ahead with a private rescue plan that is widely expected to fail.

According to the private rescue plan advised by investment banks JPMorgan and Mediobanca, Monte dei Paschi di Siena plans to raise equity to remove 28 billion euros in bad loans from its books. The bank has until December 31 to raise €5 billion in equity or face being wound down by the European Central Bank, potentially triggering a wider banking and political crisis in Italy.

La Repubblica newspaper on Thursday reported as sources close to the matter saying that the  government will pump €15 billion into the Siena-based lender and several other smaller banks to prevent such a crisis. Unlisted regional banks Banca Popolare di Vicenza and Veneto Banca, which were rescued this year by a state-backed fund, may also get support from the state, sources said.

The material has been provided by InstaForex Company – www.instaforex.com

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