The 5 billion Euro “Atlante” fund intends to amplify its effect on local banks’ efforts to sell bad debts by using some funds to buy the riskiest soured loans, writes Bloomberg. Banks, insurers and institutional investors, including state-backed Cassa Depositi e Prestiti, shall finance the fund.
12 April 2016
Under the headline “Italy seeks amplified bad-debt punch with 5 Euro billion bank fund” Bloomberg writes that this fund may unleash wider sales of non-performing loans by letting lenders access state guarantees.
Prime Minister Mateo Renzi in March said that Italy must solve its banking problem once and for all.
See also Bloomberg 11 April 2016 “Italy’s new bank rescue fund Meets with investor skepticism“.
The Wall Street Journal on 11 April 2016 titled “Italian bank stocks surge on Rome’s new bad-debt plan“, saying that constant market jitters pushed the government to explore the possibility of launching a sector-wide initiative to help deal with banks’ bad-debt problem.
1 March 2016 Reuters has been writing that this government scheme to encourage lenders to unload impared loans could at least start the ball rolling amid regulatory pressure to cut problem assets, see “Italy bad loan scheme could set ball rolling with 10-20 bln euros worth of deals“.
Some background on the state of the Italian banks and the discussions on government debt ceilings explained Tony Barber on 7 March 2016 in a FT blog “The ‘doom loop’ that ties Italian banks“.
More analysis on Bruegels´website 26 January 2016 “Bad banks and rude awakenings: Italian banks at a crossroads“, and on Social Europe 8 February 2016 “The Italian bad bank: a better alternative” latter proposing an alternative way.
News on the bad bank deal with the European Commission on Financial Times 27 January 2016 “Italy reaches ‘bad bank’ agreement with Brussels” and Bloomberg 26 February 2016 “Italy, EU reach bad-debt deal as bank shares extend decline“.