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Report: Italy might ask banks to compensate investors

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Report: Italy might ask banks to compensate investors

The Italian government is considering asking banks to helpcompensate 12,500 savers who incurred losses from its rescue of four smalllenders in 2015, Reuters reported March 30, citing a government source.

The resolutionof Banca delle MarcheSpA, BancaEtruria, CARIFESpA and Cassa diRisparmio della Provincia di Chieti SpA was carried out under newEU regulations that impose losses on shareholders and certain bondholders,Reuters said, adding that many investors claimed the banks did not inform themof potential risks when they sold them about €430 million worth of junior bonds.

The news agency noted that in the week of April 4, ItalianPrime Minister Matteo Renzi could present his cabinet with a new scheme that wouldinvolve banks, as further use of government funds to reimburse investors wouldviolate EU regulations on bank bailouts.

Italy's banks have a €100 million deposit protection fund,but since this is unlikely to cover the investors' losses the government mightask the lenders for additional funds, Reuters added.

Italy is due to sell the four lenders by late spring, although thegovernment is now looking to extend that deadline, Reuters said. The newsagency added that an association representing the affected savers wants thebanks' eventual buyers to take care of reimbursements.