Italy is to bail out another two of its failing banks at a cost of 17 billion euros, in a controversial move approved by the European Commission on Sunday.
The move will be the nation’s largest bailout yet and comes after the European Central Bank warned that both Banca Popolare di Vicenza and Veneto Banca were at risk of collapse. Milan-based Intesa Sanpaulo have agreed to take on 5.2 billion euros of the banks’ good assets, with the rest coming from the Italian Treasury.
Italian Prime Minister Paolo Gentiloni said the rescue was necessary to protect savers and ensure “the good health of our banking system”.
Italy’s decision to use taxpayer money to bail out the banking system has attracted criticism, with German conservative MEP Markus Ferber saying:
“With this decision, the European Commission accompanies the Banking Union to its deathbed. The promise that the tax payer will not stand in to rescue failing banks anymore is broken for good.
“I am very disappointed that the commission has approved this course of action. By doing so the Commission has massively undermined the credibility of the Banking Union.”
However, Economy Minister Pier Carlo Padoan responded at a press conference on Sunday: “Those who criticise us should say what a better alternative would have been. I can’t see it”.
The bailout is the latest in a series of measures necessary to reform the Italian banking system, which performed the worst in Europe in stress tests. In early June the European Commission and the Italian government agreed another large state bailout for Monte dei Paschi di Siena.