In the late afternoon of today, the Council of Ministers approved the decree drawn up by Bank of Italy and the Ministry of the Economy for the purpose of rescue the four troubled Italian banks and avoid the consequences of the bail-in which will come into force on 1 January 2016.
The rescue operation will involve Cassa di Ferrara, Banca Marche, Banca Etruria and Carichieti. The plan calls for the use of a Resolution fund worth 3,6 billion euro which will be used to restructure the four credit institutions, stemming the interruption of essential customer services. The burden will be borne by the Italian banking system, with effects on the current year's balance sheets but without recourse to public resources, with the hope that the "bridge loan" will be transformed into an investment to be recovered later, avoiding the immediate birth of a system shock.
The decree, which makes it possible to protect savers and current account holders in view of the entry into force of the bail-in (the mechanism that involves the rescue of a bank by bonds, shares and deposits exceeding 100 thousand euros before resorting to public funds) provides for the creation of four newco (or institutes - bridge) and di four bad banks that will welcome non-performing loans which will be sold to the market at a later time.
At first, to avoid weighing on bondholders and shareholders, it was thought to use the Interbank deposit protection fund. However, Brussels did not like the solution, which allegedly classified the operation as state aid. LThe creation of the resolution fund therefore makes it possible to shorten the times and stem the perplexities of the European Union. At this point, all we have to do is wait for the European Central Bank's opinion on the establishment of the new bridge banks.
At the end of the meeting, through a press release, Palazzo Chigi announced that "The Council of Ministers, on the proposal of the President Matteo Renzi and the Minister of Economy and Finance Pietro Carlo Padoan approved a decree law which contains some procedural rules aimed at facilitating the timely and effective implementation of the resolution procedures of Cassa di Ferrara SpA, Banca delle Marche SpA, Banca Popolare dell'Etruria e del Lazio – Cooperative Society and Savings Bank of the Province of Chieti SpA”. The decree, underlines the note, “does not provide for any form of financing or public support to the banks under resolution or to the National Resolution Fund'.
