The governor of the Bank of Italy (BOI) said on Sunday European Union rules on bank rescues should be applied "reasonably" after coming under fire for the failure and rescue of four lenders which wiped out the savings of thousands of retail investors. Italy ploughed 3.6 billion euros ($3.9 billion) into Banca Marche, Banca Etruria, CariChieti and CariFe at the end of November to save them from collapse, using a fund financed by healthy banks.
People who had bought shares and junior debt took painful losses, drawing criticism of Prime Minister Matteo Renzi's government, the BOI and the financial market regulator.
Visco defended the BOI's conduct in an interview and echoed Renzi by placing some of the blame with European Union rules aimed at shielding taxpayers in bank rescues.
"Europe is slowly starting to realise what the real consequences of the new rules can be," Visco told Italian newspaper La Repubblica, adding that the bloc's legislative decisions in this area had "honest intentions".
Losses incurred after the rescue shook the faith of Italian retail investors in assets which have traditionally been a steady source of funding for their banks, and one man killed himself after his savings disappeared.
"We now have to reassure savers that all our institutions are working to avoid more (similar) cases, and to ensure that European Union rules are not applied mechanically," Visco said.
The scandal intensified after it emerged that many ordinary Italians had been sold risky subordinated bonds which are last in the line of creditors to get repaid in case of bankruptcy.
Visco said he hoped anyone who had done wrong would pay for it, and was confident the judiciary would work to ensure that.
He added that the BOI was now in the final phase of resolving the problems of several small banks it had put under special administration in the past few months.
Comments
Comments are closed.