Finance minister rules out bailout for MPS
But Bank of Italy sanctions 'on the way', Grilli says29 January, 17:08
(ANSA) - Rome, January 29 - Italian Finance Minister
Vittorio Grilli on Tuesday ruled out a bailout for the country's
third-largest bank, Monte dei Paschi di Siena (MPS), at the
centre of an unfolding derivatives scandal.
"State intervention does not represent a rescue operation
for an insolvent bank but rather the strengthening of its
capital" according to European Banking Authority standards, said
Grilli during a parliamentary hearing in reference to last
week's decision by Italy's central bank to approve government bonds worth 3.9 billion euros to the Sienese lender to cover losses incurred in recent derivatives deals.
"One of Italy's strong points is the recognised solidity of
its banking system," he continued.
"Our banks have shown unique abilities. Rescue operations
are unnecessary. There is no need to sow doubt about the
solidity of the system, it does not correspond to reality. Not
even the problems of MPS alter this picture," said Grilli.
But amid a probe into possible fraud, Grilli added that Bank of Italy sanctions were "on the way" because of past mismanagement at the Tuscan bank, in connection with 17 billion euros' worth of bank transfers made in an 11-month period.
The world's oldest bank came under fire early last week
after it emerged that over 700 million euros had been lost in at
least two derivatives deals that the Italian credit institution
said it had only recently discovered.
The scandal has rocked the country's financial
establishment and also renewed criticism of the alleged mingling
of banking and politics in Italy.
MPS, through its foundation, has historically been linked
to the centre-left Democratic Party (PD), which has long been
dominant in Siena and the rest of Tuscany.
The bonds, dubbed 'Monti-bonds' after outgoing Premier Mario Monti, must be paid back by MPS at market rates. If they are not, the State will take out shares in the bank.
MPS on Friday approved capital increases to pay back the bonds.