Rome out to rescue two troubled banks

ROME-25 June 2017: At the 11th hour, the Italian government has vowed to rescue two troubled Venetian banks with the aid of a retail bank, plus billions of taxpayer's cash.

The government was due to meet over the weekend to devise the rescue framework for Banca Popolare di Vicenza and Veneto Banca, the finance ministry said in a statement Friday night.

Both banks face bankruptcy and European authorities say it is for Rome, not Brussels, to deal with their liquidation, involving selling off their good assets and transferring toxic assets to a "bad bank," essentially financed by Rome.

Italy will stage the rescue along with some support from the country's biggest retail bank Intesa Sanpaolo.

Whereas the latter has put a symbolic euro on the table, the cost to the Italian state will be around 10 billion euros ($11 billion).

The development comes amid deep concern within the 19-member eurozone at the parlous state of some Italian banks with Rome still to resolve the problem of piles of risky loans sitting on the books of some of them.

In its statement, the ministry said the government would be meeting "over the weekend to adopt necessary measures to ensure banking activity is fully operational, with protection for all current account holders, deposits and senior shares."

Intesa Sanpaulo will pick up healthy assets "so as to allow the normal opening of branches Monday morning," according to the Corriere della Sera newspaper.

In parallel, a "bad bank" will be created for toxic assets likely never to be repaid to creditors in an operation the Corriere report put at "between 8.0 and 10 billion euros" to the state.La Republicca estimated the cost at "10 to 12 billion euros."