French Finance Minister Michel
Sapin said ahead of a key Eurogroup meeting Monday on Italian
moves to bolster its banking system that "today there is a
concern for the Italian government, to take the measures
necessary to restore confidence in the whole Italian banking
system. I believe it is our duty to show solidarity".
He said the rules "should not be softened, but applied with
intelligence".
Italian Economy Minister Pier Carlo Padoan is taking part
in the talks at the Eurogroup Monday and then on Tuesday at the
ECOFIN to assess the latest Italian measures to help its
struggling banks.
Italy's banks are suffering from a high level of
non-performing loans (NPLs), estimated at a gross 360 billion
euros in total, with Monte dei Paschi di Siena (MPS) the worst
affected.
The troubled Tuscan lender, the world's oldest bank, may
require a rescue with ultimate public backing - a controversial
measure under EU rules, which the Eurogroup and the ECOFIN are
set to discuss.
MPS rose 8.8% on the Milan bourse amid optimism on the
Eurogroup's decisions.
The Italian financial sector has already set up one private
bank bail-out fund, Atlante, which has helped a couple of ailing
Veneto banks.
There is an expectation now that a second fund, dubbed
Atlamte 2, will be set up with the aim of allowing MPS to meet a
European Central Bank demand to offload 10 billion in NPLs.
This would need to be followed by a recapitalisation,
hopefully with some form of public support, if that is OK'd by
the Eurogroup and the ECOFIN.
The Financial Times said Monday that Italy's banks were in
need of "essential repairs".
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