When zero interest means zero interest for Italian bailouts


FT reports,

“Atlante, a privately backed €5bn fund rushed into existence in April to quell the threat of contagion from struggling lenders, took control of Veneto Banca after a €1bn capital increase demanded by EU bank regulators attracted zero interest.”

Zero interest. Not a little. ZERO. After the 40bn and 150bn bailouts were rejected.

“The fund, known as Atlas in English, was intended to hold up the sky for Italian banks. But is showing signs of strain, having depleted more than half of its war chest after taking control of Popolare di Vicenza, another regional bank, last month.

That has left little in reserve to tackle about €200bn in non-performing loans run up during Italy’s three-year recession, of which €85bn have not yet been written down. Bad loans are weighing on bank lending and crimping an already weak recovery.”

The question now is whether pension funds will be raided to provide the liquidity the ECB and EU leaders won’t endorse. The catch to me would seem if these banks do go under the flaw in the inflexibility of the EU will only be exposed and make Brexit and the potential for Dexit, Frexit, Nexit, Czecxit etc etc more plausible.

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