The Italian government looks set to put Veneto Banca and Banca Popolare di Vicenza, two troubled regional lenders, into liquidation, selling off the good assets to a rival bank for a symbolic price. The toxic assets would be transferred to a bad bank, mostly funded by the government. Shareholders and junior bond-holders would contribute to the rescue, while senior creditors would be spared. The rival bank, Intesa Sanpaolo, would be getting a great deal for little risk. But for the Italian taxpayer, and the credibility of euro zone financial regulation, the plan is a loser and should be stopped.
Relevant Posts
- Véron, Nicolas, (2017), «ECB finally addressing Italian bank woes», Bruegel, 4 January
- Gros, Daniel, Pieter de Groen, Willem, (2016), <<A radical cure for Italy’s banking problems: A combination of good banks and soft bail-in», CEPS, 20 December