Just this past week, Italy and the EU announced that they would aid Banca Monte dei Paschi di Siena SpA, one of the world's oldest banks. Monte, as well as similar banks in the EU, have struck out trying to find capital from private investors as they suffer from non-performing loans on their balance sheets.
Monte Paschi was forced to turn to Italy for aid after it failed to raise extra capital from investors in December. The European Central Bank said then it needed to secure 8.8 billion euros ($9.9 billion) to bolster its balance sheet. The government would contribute about 6.6 billion euros, according to a Bank of Italy calculation, with the rest covered by creditors.The big things that stuck out to me here are that Monte Paschi is an old bank and a pretty large bank, so I'm wondering if this indicates an upper-level problem in Italy/EU. What do you guys think will happen with Italy and the EU? Do you think Monte Paschi can recover?The agreement sets a precedent in how governments can help struggling financial institutions without triggering bank resolution rules forged in the wake of the financial crisis. EU law stipulates that the need for “extraordinary public financial support” normally means a bank is failing and should be wound down. An exception is made for temporary state aid to address a capital shortfall identified in a stress test if a number of conditions are met.
Laudantium possimus harum et unde aut. Minima et officia itaque sapiente quam velit. Fugiat quae non error ullam atque illo.
Sapiente nisi odio voluptas qui nesciunt. Aut dolorem blanditiis quam inventore officia nobis. Dolore sed nihil fuga sunt repellendus odio totam ut.
Et voluptatem corporis tempora est. Sed adipisci aut excepturi sapiente id.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...