Italy has saved several of the country's banks from collapse since 2016. Now it's time again. The government approved an emergency ordinance to save the Volksbank Popolare di Bari on Sunday and provided grants of up to EUR 900 million. The institute in the Apulia region had been in great trouble because of its mountain of bad credit.
The Italian central bank had placed the largest lender in southern Italy under special administration on Friday. "The government is on the side of the savers and employees of Popolare di Bari and is committed to reviving it for the benefit of the southern economy," said Minister of Economy Roberto Gualtieri.
However, according to a decree adopted by the Council of Ministers on Sunday evening, funds from the Ministry of Finance should not go directly to the bank. Rather, the capital of the state development bank Banca del Mezzogiorno-Mediocredito Centrale is to be increased. Together with the deposit guarantee fund FITD and possible other investors, this should be able to take over the restructuring of the Volksbank in Bari. Business operations are expected to continue on a regular basis.
Prime Minister Giuseppe Conte reiterated on Sunday that everything will be done to protect savers and hold those responsible to account. Within the European Union, bank deposits up to 100,000 euros per customer and bank are legally protected.
The move is politically delicate
The traditional bank Monte dei Paschi di Siena, which was saved in 2017 with an eight billion euro rescue package from the collapse, is among the money houses saved in recent years. The then opposition populist 5-star movement had described government aid as a waste of taxpayers' money. In the meantime, the 5 stars govern together with the Social Democrats (PD).
State aid for the Popolare die Bari is likely to put a strain on the relationship between the coalition partners. On Friday, Conte had said that the banking industry was doing well and that government bailouts were not necessary
