The ECB rejected the Monte dei Paschi extension request in finding private capital
The European Central Bank (ECB) has rejected a request from the Italian bank Monte dei Paschi di Siena (MPS) to be given more time to implement the capital increase of 5 billion. Euro to be done, intensifying pressure on the Rome government to bail with state money the bank, says a Reuters news agency. According to a report in the Financial Times, Italy has virtually no other choice than to allocate state funds to the bank and impose losses on creditors.
The third largest Italian bank, which is the oldest in the world, had requested an extension three weeks, until January 20 to complete a project of private rescue because of political uncertainty after the 'no' in the referendum on constitutional reform and the resignation of Prime Minister Matteo Renzi.
The ECB's supervisory board rejected the request, considering that a delay (in the recapitalization of MPS) would be of little use, and it is time to intervene in Rome, said the source cited by Reuters. According to sources cited by the Financial Times, the ECB feared that the MPS situation, if not addressed, could lead to a systemic crisis of the Italian banking system.
The trading of the shares of the Italian bank was suspended after the news led to a dip of 11%. The rescue of MPS by imposing losses on creditors (bail-in) is expected to have implications for the rest of the Italian banking system. The share price of UniCredit, which is the largest Italian bank in terms of assets, a loss almost 6% after the reports. Bankers expect that UniCredit should reduce the price at which it moves to increase 13 billion capital. Euro planned for 2017.
Before the ECB decision, senior bank officials had stated that it has become the main job for the so-called preventive recapitalization of MPS, which means to bear the bondholders of the bank some of its losses in order to reduce the amount to be paid from taxpayers' money to the rescue. The value of subordinated bonds of MPS collapsed today because of fears that it would be exposed to losses in the context of rescue measures, as reported by Financial Times.
For state aid to rescue the bank Monte dei Paschi di Siena
The caretaker government Renzo directed to grant state aid to the bank Monte dei Paschi di Siena, to avoid bankruptcy, according to reports in the Italian press.
The movement of the Rome Finance Ministry may be necessary after the leak of information about the intention of the European Central Bank can not agree to extend to twenty days anakefalaiopoisi of the bank through the purchase. This news, however, has not been officially confirmed.
The Italian daily La Repubblica writes that the state aid will probably be approved over the weekend, a decision which will be signed by the caretaker Finance Minister Pier Carlo Padoa. The Padoa met President and CEO of Monte dei Paschi di Siena. The share of the bank today suffered a large drop in the Milan stock exchange and trading was suspended.
The European Central Bank (ECB) has rejected a request from the Italian bank Monte dei Paschi di Siena (MPS) to be given more time to implement the capital increase of 5 billion. Euro to be done, intensifying pressure on the Rome government to bail with state money the bank, says a Reuters news agency. According to a report in the Financial Times, Italy has virtually no other choice than to allocate state funds to the bank and impose losses on creditors.
The third largest Italian bank, which is the oldest in the world, had requested an extension three weeks, until January 20 to complete a project of private rescue because of political uncertainty after the 'no' in the referendum on constitutional reform and the resignation of Prime Minister Matteo Renzi.
The ECB's supervisory board rejected the request, considering that a delay (in the recapitalization of MPS) would be of little use, and it is time to intervene in Rome, said the source cited by Reuters. According to sources cited by the Financial Times, the ECB feared that the MPS situation, if not addressed, could lead to a systemic crisis of the Italian banking system.
The trading of the shares of the Italian bank was suspended after the news led to a dip of 11%. The rescue of MPS by imposing losses on creditors (bail-in) is expected to have implications for the rest of the Italian banking system. The share price of UniCredit, which is the largest Italian bank in terms of assets, a loss almost 6% after the reports. Bankers expect that UniCredit should reduce the price at which it moves to increase 13 billion capital. Euro planned for 2017.
Before the ECB decision, senior bank officials had stated that it has become the main job for the so-called preventive recapitalization of MPS, which means to bear the bondholders of the bank some of its losses in order to reduce the amount to be paid from taxpayers' money to the rescue. The value of subordinated bonds of MPS collapsed today because of fears that it would be exposed to losses in the context of rescue measures, as reported by Financial Times.
For state aid to rescue the bank Monte dei Paschi di Siena
The caretaker government Renzo directed to grant state aid to the bank Monte dei Paschi di Siena, to avoid bankruptcy, according to reports in the Italian press.
The movement of the Rome Finance Ministry may be necessary after the leak of information about the intention of the European Central Bank can not agree to extend to twenty days anakefalaiopoisi of the bank through the purchase. This news, however, has not been officially confirmed.
The Italian daily La Repubblica writes that the state aid will probably be approved over the weekend, a decision which will be signed by the caretaker Finance Minister Pier Carlo Padoa. The Padoa met President and CEO of Monte dei Paschi di Siena. The share of the bank today suffered a large drop in the Milan stock exchange and trading was suspended.