Brussels, 04/07/2016 (Agence Europe) - The European Commission is in constant talks with Rome over solutions for the Italian banking sector, which has been hit hard by a high stock of non-performing loans.
We are discussing measures with the Italian authorities which “can be put in place in full compliance with the EU rules addressing liquidity and capital shortages in banks without adverse effects on retail investors”, a spokesperson to the European institution, Ricardo Cardoso, announced on Monday 4 July.
“There is a debate in Italy saying you have to keep retail investors out of the bail in” of the banks, Elke König, President of the Single Resolution Board, told the news agency Bloomberg the same day. However, the 'BRRD' directive on bank recovery and resolution “rightfully only looks at the creditor hierarchy”, she explained. “I have a lot of sympathy for solutions that address the social issues, but that should be done alongside the measures of the 'BRRD', for example through specific social measures for affected creditors”, she added.
The Commission appears prepared to consider solutions which are possible under the preventative recapitalisation scenario provided for by the 'BRRD' directive (article 32.4). However, this directive states that these solutions are only available to solvent institutions. The results of the European Banking Authority's stress tests will be announced on Friday 29 July.
According to the Financial Times, the Italian government is prepared to do anything, up to and including to act unilaterally, to help the Italian banks. It is also worth noting that the Wall Street Journal reports that the ECB has asked the bank Monte dei Paschi di Siena to reduce its portfolio of non-performing loans from €46.9 billion to €32.6 billion. (Original version in French by Elodie Lamer)