Monte Paschi Wins EU Backing for $6.1 Billion in State Aid
- European Commission approves Italy’s capital injection
- Burden sharing to involve shareholders, junior creditors
The Banca Monte dei Paschi di Siena SpA's logo sits on a window at one of the company's bank branches in Rome, Italy, on Wednesday, Jan. 27, 2016. Italy's banking woes are set to plague Prime Minister Matteo Renzi for months to come after a long-sought deal with the European Union on bad debts disappointed investors.
Photographer: Alessia Pierdomenico/BloombergBanca Monte dei Paschi di Siena SpA won formal European Union approval to receive 5.4 billion euros ($6.1 billion) in aid from Italy’s government, removing a further source of turmoil from the country’s financial system.
After months of negotiations, the European Commission cleared the so-called precautionary recapitalization of a lender that needs state support to survive even though regulators have declared it solvent. Monte Paschi turned to Italy for help after it failed to raise funding from investors in December.