The rescue of MPS must be carefully weighed and doubts are also circulating within the ECB. According to an advance by Il Sole 24 Ore, the European Central Bank has in fact asked to increase the State intervention from 5 to 8,8 billion, in a letter sent to the Sienese bank by the Frankfurt Supervisory Authority after last week the bank had started the process for the precautionary recapitalization envisaged by the savings saving decree.
Of the 8,8 billion requested, approximately 4,5 billion would be paid directly by the State, the other 4,3 by bondholders (with approximately 2 billion repayable, however, by the State to holders of retail bonds). A board meeting is expected in the evening.
Just on Monday, in the advances of an interview that will be published on Tuesday by Die Bild, the president of the Bundesbank Jens Weidman expressed doubts about the decree establishing the 20 billion for the recapitalization of banks in crisis: "For the measures decided by the Italian government banks need to be financially sound at the core level. The funds cannot be used to cover losses that are already foreseen,” said the head of the German central bank. And other doubts are expressed by Isabel Schnabel, a member of the Sachverstaendigenrat, the Council of Economic Experts of Germany, the so-called “Five Wise Men” who states: “an extensive clean-up of the Italian banking system is necessary and must be carried out promptly. Insolvent banks must be closed, viable banks must be recapitalised. Bad debts should be removed from banks' balance sheets." According to Weidmann, the risk is that there will be strong turbulence. "All of this needs to be carefully examined." Weidmann explains that the European rules “serve to protect taxpayers and give responsibility to investors. State funds are as a last resort."
