Bail in or not to bail in? That is the question. To help Italian banks, first of all MPS, the Italian government is asking Europe for a derogation from the new rules on domestic crisis resolution, which prohibit state aid and require that bailouts be borne by shareholders, bondholders and depositors (the latter only as a last resort and for the portions of deposits that exceed 100 thousand euros). But what numbers are we talking about? Here is a diagram that summarizes the situation of Italian banks, highlighting which (and how much) money of savers and investors is theoretically subject to bail in.
Faced with this scenario, our country does not ask to change the rules, but appeals to a rule already in force: article 45 of the communication on state aid to banks, which, while confirming the need for a contribution from shareholders and of bondholders, makes it possible to intervene with public money in favor of solvent banks in the event that the slavish application of the bail in jeopardizes the stability of the financial system. The EU Commission seems inclined to find a compromise with Italy by exempting non-institutional investors from the contribution (but not institutional ones, including the banks themselves).
Meanwhile, an unexpected assist for Italy arrived from Germany on Sunday. David Folkerts-Landau, chief economist of Deutsche Bank, said that "Europe urgently needs a €150 billion bailout fund to recapitalize its institutions problematic", because the continent's finance "is extremely sick and has to start dealing with its problems very quickly, otherwise there could be an accident". Surely "a second financial crisis like in 2008" is not looming?, but "we have a slow, long downward spiral ahead," she added.
Positive signals for our country also came from France: "I'm not in favor of a softening of European rules after Brexit - said Finance Minister, Michel Sapin, before today's Eurogroup -, but I'm for intelligence in applying these rules. I defy anyone to be for stupidity. The concern of the Italian government is to take the necessary measures to restore confidence in the Italian banking system as a whole. I think it's our duty to show solidarity."
