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BUSINESS

Italian firms ‘could get German state loans’

Small business owners in Italy could soon be eligible for German government loans, as part of a plan by German Finance Minister Wolfgang Schäuble to help support southern European economies hurt by the eurozone crisis.

Italian firms 'could get German state loans'
Wolfgang Schäuble (file photo).

If Schäuble's plan goes ahead, a credit scheme already planned for small and medium-sized enterprises (SMEs) in Spain would be extended to cover Portugal and Italy, he was quoted as saying Sunday.

Under the Spain programme, which Schäuble recently presented to parliament, Germany's KfW public investment bank will offer €800 million  (about $1 billion) in loans to businesses via Spain's ICO bank. 

"I have told my Portuguese colleagues already: you can have all this too," Schäuble was quoted as telling weekly business magazine Wirtschaftswoche.

The report said Germany would extend the same offer to Italy.

Schäuble is set to meet the Italian and French finance and labour ministers in Rome on Friday.

The report said launching the programme for Greece would initially be more difficult because it lacked a similar development bank, although a partner institution could be set up.

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BUSINESS

EU finds Italy’s Alitalia loans ‘illegal’ but airline free to keep money

The EU's antitrust authorities ruled Friday that Italy's 900 million euro loans to long-struggling airline Alitalia were "illegal", but cleared the country's new carrier to get state funding and avoid paying back the money. 

Ahmad AL-RUBAYE / AFP
Ahmad AL-RUBAYE / AFP

“Following our in-depth investigation, we reached the conclusion that two public loans worth EUR 900 million granted by Italy to Alitalia gave the company an unfair advantage over its competitors, in breach of EU State aid rules,” said EU competition chief Margrethe Vestager said in a statement.

“They must now be recovered by Italy from Alitalia to help restore a level playing field in the European aviation industry.”

But the authorities in Brussels simultaneously said new flag airline ITA – set to start flying next month – was not liable to reimburse the money and that 1.35 billion euros being injected into the firm by Rome did not breach state aid rules.

“Italy has demonstrated that there is a clear break between Alitalia and the new airline ITA, and that its investment in ITA is in line with terms that a private investor would have accepted,” Vestager said.

“Once ITA takes off, it is for Italy and ITA’s management to make use of this opportunity once and for all. And we will continue to do our part to ensure fair competition in the European aviation sector.”

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Loss-making Alitalia was placed under state administration in 2017 but Italy has struggled to find an investor to take it over. The situation was only exacerbated by the coronavirus pandemic that grounded airlines worldwide.

The Italian government gave the company two loans for the amount of EUR 600 million and EUR 300 million in 2017, as Alitalia scrambled for liquidity without access to the debt market.

Earlier this year Italy said it had reached an agreement with the European Union for a bailout that creates a new debt-free company to take over some of Alitalia’s assets – ITA.

The board of directors of ITA last month approved a binding offer for 52 of Alitalia’s aircraft, related airport slots and other assets.

The Italian government has created a 100-million-euro ($117-million) fund to reimburse Alitalia customers.

Italy provided state loans to Alitalia totalling 1.3 billion euros between 2017 and 2019.

In July, it approved another 700 million euros for ITA.

Further sums are expected in 2022 and 2023, bringing the total to 1.35 billion euros.

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