, Columnist
Europe's Banking Union Is Dying in Italy
Italy's plan to rescue two small banks makes a mockery of Europe's new regulations.
What price, the rescue?
Photographer: Alessia Pierdomenico/BloombergThis article is for subscribers only.
The Italian government looks set to put Veneto Banca and Banca Popolare di Vicenza, two troubled regional lenders, into liquidation, selling off the good assets to a rival bank for a symbolic price. The toxic assets would be transferred to a bad bank, mostly funded by the government. Shareholders and junior bond-holders would contribute to the rescue, while senior creditors would be spared.
The rival bank, Intesa Sanpaolo, would be getting a great deal for little risk. But for the Italian taxpayer, and the credibility of euro zone financial regulation, the plan is a loser and should be stopped.