There is a third possible way for Veneto Banca and Popolare di Vicenza. The two institutions need to find private investors willing to pour another 1,2 billion into their coffers, so that Brussels gives the go-ahead for the public bailout. Up to now it has been said that, if this enterprise fails, the only solution would be the bail in, or the European resolution procedure which would also involve shareholders, bondholders and deposits over 100 thousand euros. But in reality, as Federico Fubini points out today in the Corriere della Sera, there is also another practicable path.
It is called "ordered liquidation" and is provided for by European provisions. «Member States – reads the Banking Communication of the EU Commission of 2013 – should encourage the exit from the market of inefficient operators in an orderly manner» and «in such a way as to protect financial stability». This hypothesis "should always be taken into consideration if the institution cannot credibly restore long-term viability".
There is no mention of the bail-in, so no losses would be imposed on ordinary bondholders or depositors. Instead, the subordinated bonds would be cancelled, but the Italian government could reimburse the holders of them as will happen for the creditors of MPS.
The orderly liquidation "means that no new activity can be undertaken - continues the EU communication - but only the execution of existing activities". In other words, Veneto Banca and Popolare di Vicenza would receive from the State only the money necessary to bring to maturity or sell the positions already open and could do nothing else.
Moreover, the bail-in directive itself states that "the hypothesis of liquidation should be examined before applying resolution tools". The Single Resolution Board (Srb), the European agency for the exercise of resolution functions, can decide that it is not in the public interest to put banks in resolution, in order to avoid risks of contagion or panic among depositors of other banks.
SECURITY UPDATE TRAINING
For the Italian government, the main road that must lead to the rescue of Banca Popolare di Vicenza and Veneto Banca passes through the agreement with the EU on the precautionary increase. This is what government sources specified to the Mf-DowJones agency regarding press rumors according to which there is also a plan C, a third way, to prevent the bail-in of the two Veneto banks, through orderly liquidation.
