Banks and state aid: The rule of flaw

Posted: May 13, 2016 in economy
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The war within

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Banks and state aid


Italy has been flirting with a banking crisis—and Brussels is partly to blame

ATLAS could hold up the sky. Atlante, Italy’s bank-rescue fund, looks like a weakling. The fund, which raised €4.25 billion ($4.9 billion) last month, almost half of it from Italy’s two largest banks, has two purposes. One is to act as an emergency investor in banks starved of funds; the other is to kick-start a market in dud loans clogging up banks’ balance-sheets. On both counts, the fund has not done enough to calm nerves. Italy should have acted sooner to sort out its banks. But Europe’s approach to financial crises is also to blame.
Italian officials talk about the fund as a “game-changer”—partly because it has already pulled off a rescue of Banca Popolare di Vicenza (BPVi), a regional bank whose initial public offering (IPO) flopped. But that only underlines how close Italy has come to disaster. BPVi’s IPO had been fully, and foolishly, underwritten by UniCredit, Italy’s largest bank: …

via Economic Crisis


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