Italy's banks

Renzi's Race against Time

Italian Premier Matteo Renzi answers a reporter's question during a press conference at Rome's foreign press association, Monday, Feb. 22, 2106. Renzi briefed foreign correspondents on his two years in government. (AP Photo/Domenico Stinellis).
Matteo Renzi is trying to find ways to help Italian banks.
  • Why it matters

    Why it matters

    • Italian Prime Minister Matteo Renzi is shifting to a private-sector approach to bailing out ailing Italian banks. That approach would be preferable to the European Commission, which objects to government bailouts of banks except in cases that threaten an entire country’s financial stability.
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  • Facts

    Facts

    • One of Mr. Renzi’s goals is to prevent small investors in major bank Monte dei Paschi from taking a hit.
    • Monte dei Paschi needs capital to unload a package of bad loans.
    • The results of this year’s stress test, to be released on Friday, are not expected to be flattering for many Italian banks.
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    Audio

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Italian Prime Minister Matteo Renzi has been scrambling to find a solution to clean up his country’s banking system for months.

The Italian government has repeatedly met with European Union Commissioner for Competition Margrethe Vestager to negotiate the terms of possible government bailouts. But now Mr. Renzi has placed the struggle over government support on hold, switching gears to an approach that relies on private instead of government funding.

According to European negotiators, Mr. Renzi suddenly wants to try to find solutions without public funds. For instance, the severely battered major bank Banca Monte dei Paschi is to receive a capital injection of €5 billion ($5.54 billion), with the help of private investors, provided someone can be found who is willing to give the troubled bank more money.

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