ITALY IN FREEFALL: Bailout needed for crisis-hit oldest bank nearly DOUBLES to £7.5bn

Tuesday, December 27, 2016
By Paul Martin

EUROPE’S oldest bank is in much worse shape than previously indicated and requires a £7.5bn bail out.

By SIOBHAN MCFADYEN
Express.co.uk
Tue, Dec 27, 2016

Experts have wildly underestimated the rescue package needed for Monte Dei Paschi Di Siena Banca, with financers initially looking to source £4.26bn.

But the liquidity crisis affecting the bank was made worse by the constitutional referendum put forward by former Italian Prime Minister Matteo Renzi who has since resigned.

According to reports the delay in a possible state bail out caused by the Italian referendum cost a whopping £3.2bn now rescuing the bank over its capital shortfall will cost it dear.

New Prime Minister Paolo Gentiloni approved £17bn in public funds to help stabilise his country’s most fragile financial institutions last week.

All of Italy’s banks have been hit by “non performing loans” (NPLs) which are made up of Tier 3 products which are years old and have been sold on repeatedly to those willing to take them on.

Like a black hole of cash and sometimes compared to the card game Old Maid, the NPL’s make up products known as derivatives, which banks buy and trade on and are sometimes swapped.

The Rest…HERE

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