The conundrum the Italian government faces with the country’s oldest bank
Trouble at Monte dei Paschi di Siena will test whether EU state-aid rules can outlast the pandemic
The public outcry against bank bailouts during the financial crisis prompted European governments to constrain the use of public money to help lenders in crisis. New trouble at the region’s oldest bank will test whether these rules can outlast the pandemic.
The Italian government faces an impossible decision over Monte dei Paschi di Siena. Italy nationalised the bank in 2017, but had to commit to returning it to the market promptly to abide by EU state-aid rules. The deadline for a sale — set for the end of 2021 — is approaching fast, but the bank faces a fresh capital shortfall and a dearth of possible investors. UniCredit, Italy’s second largest bank by assets, is the only plausible buyer but it would demand significant sweeteners. It’s not clear whether these are compatible with EU law...
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