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More Italian Bank Restructuring

 1 min read / 

The Italian government has received approval from the EU for a €5.4bn injection of public funds into Banca Monte dei Paschi, the world’s oldest bank.#

Editor’s Remarks: Italian Bank restructurings are like the buses. You wait years for one, and suddenly three come along at once. After months of discussions, the European Commission has finally agreed to the capital injection after the bank agreed to a massive balance sheet restructuring and salary caps for senior managers. Over €26bn of the bank’s bad loans will be sold to private funds, including the riskiest tranches to the Atlante II bank rescue fund, at an average of around of 20% of face value. The bank reported total assets of €164bn at the end of 2016, so this is a large chunk of its assets. Its business will also be re-oriented towards SME’s and retail banking. The continued use of public funds to fix Italy’s zombie banks is bound to attract controversy, but at least private money is going in this time.

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