Italian government to protect retail investors, savers in any bank salvage

Rome, Dec 21 (IANS/AKI) The Italian government will shield retails investors and savers from the effects of a bail-out of its ailing banks, Economy Minister Pier Carlo Padoan said on Wednesday.

“The government reaffirms its commitment to ensure the maximum protection for retail investors allowed under European law,” Padoan told the Italian parliament.

“If a (government) intervention is necessary, the impact on savers will be absolutely minimal or non-existent,” he added.

Italy’s lower and upper houses of parliament on Wednesday approved a government request to increase the public debt by up to 20 billion euros to fund a rescue package to prop up its struggling lenders, starting with Monte dei Paschi di Siena (MPS), the world’s oldest bank.

The 20-billion-euro sum “is sufficient” to solve the problems of an Italian banking sector that “is solid, healthy, with some well-known critical cases with specific characteristics for each,” Padoan said.

MPS, founded in 1472, is struggling to complete a 5-billion-euro recapitalisation by the year’s end, as required by the European Central Bank after it came bottom in recent stress tests.

The Tuscan bank said it had only four month’s worth of liquidity left in an updated filing on its rights issue, down from 11 months communicated last week.

Many investors expect that the Italian treasury will have to salvage MPS as early as this week to stop it being wound down by European regulators.

MPS was due to close a four-day recapitalisation bid on Thursday amid strong expectations it would fall short of the 5-billion-euro target.