Italy to save regional bank
The Italian cabinet has approved a rescue package for the regional bank Banca Popolare di Bari. The state will provide up to 900 million euros. Over the years the bank has accumulated losses of one billion euros. Defaulted loans worth three billion euros are also weighing on the balance sheet. Since last week the institution has been under the supervision of the Italian central bank Banca d’Italia.
However, the financial injection decided by the Italian Government will not go directly to Banca Popolare di Bari. Instead, the government will use the money to strengthen the capital of the state development bank Banca del Mezzogiorno-Mediocredito Centrale (MCC). This bank will undertake the restructuring together with the Italian banks’ deposit guarantee fund FITD and other investors.
After tough negotiations with the EU Commission, the Italian state had already backed the world’s oldest bank, Monte dei Paschi di Siena, in 2017. In the case of Banco Popolare di Bari, too, the European authorities will have to agree to the rescue operation. Reuters