Italy is weighing a plan to rescue four lenders under the region’s new resolution rules after European regulators opposed a bailout that sought to tap the country’s deposit-guarantee fund, according to two people with knowledge of the matter.
Banca delle Marche SpA, Banca Popolare dell’Etruria e del Lazio SC, Cassa di Risparmio di Ferrara SpA and Cassa di Risparmio della Provincia di Chieti SpA may be rescued with financing from the national resolution fund, said the people, who asked not to be identified because the discussions are private.
Italian authorities may split the banks’ bad assets, including non-performing loans, into separate units, with shareholders and subordinated-debt holders incurring some losses, the people said. The bank’s viable units may also receive loans from other lenders, the people said.
The four companies have been placed under administration by Italy’s regulators after their capital buffers were eroded. Italy has been seeking to accelerate banks’ disposals of soured loans by creating a bad bank, which hasn’t gained the backing of the European Commission. The nation’s bad loans reached a record high of 200 billion euros ($213 billion) in September.
An agreement may be reached within a few days, while terms may still change, according to the people. The government convened an extraordinary cabinet meeting on Sunday to approve a decree law on the banks’ rescue, Reuters reported earlier, without elaborating.
An official at Bank of Italy declined to comment. A spokesman for the Treasury didn’t return calls seeking comment.
The European Commission opposed a previous bailout that relied on funds from a deposit-guarantee scheme that’s funded privately by Italy’s lenders, according to the people.
“The Commission continues to be in close contact with the Italian authorities on their plans to intervene in the four banks,” spokesman Ricardo Cardoso said.