Italian bonds included in ECB stimulus plan

The European Central Bank (ECB) on Monday set out on its massive bond purchase programme, including €150 billion worth of Italian bonds, as it seeks to ward off deflation and stimulate growth in the single currency area.

Italian bonds included in ECB stimulus plan
ECB chief Mario Draghi. Photo: Daniel Roland/AFP

Most of the Italian bonds would be bought through the Bank of Italy, Ansa reported. 

ECB chief Mario Draghi announced the 18-month plan to buy at least €1.14 trillion ($1.2 trillion) in bonds, at a rate of €60 billion per month, back in January.

But it was only last week that he named Monday as the exact start date for the scheme.

"The ECB and Eurosystem national central banks have, as previously announced, started purchases under the Public Sector Purchase Programme," the ECB announced via Twitter on Monday.

The bank hopes that by buying bonds off investors they will invest the money elsewhere, thus boosting growth and preventing a dangerous cycle of falling prices from setting in.

Italian investors responded well to the news, pushing the FTSE Mib in Milan up by 0.57 percent to end the day’s trading at 22,564 points – a level not seen since the spring of 2011, Ansa reported.

The Bank of Italy bought €130 billion of Italian State paper while the ECB itself bought about €20 billion, Ansa said.

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ECB fines rescued Italian bank €11.2 million

The European Central Bank has fined an Italian bank in the throes of a state rescue for breaking rules on risk and disclosing information, the Frankfurt institution said on Friday.

ECB fines rescued Italian bank €11.2 million
Photo: Tiziana Fabi/AFP

Regulators decided in May to fine Banco Popolare di Vicenza a total of €11.2 million euros ($13.4 million), the ECB said in a press release.

Some €8.7 million of the sum was a penalty for the bank missing requirements in quarterly and annual reports in 2014 and 2015.

On top of that, the supervisors levied €2.5 million over the bank breaching limits on large exposures to risk between December 2015 and March 2016.

The rule is supposed to prevent financial institutions making themselves too vulnerable to losses stemming from the failure of a single client or group of connected clients.

Popolare di Vicenza is one of two failing banks from the Venice region liquidated by the Italian state in June, ahead of a takeover by the country's biggest lender Intesa Sanpaolo.

The firms had been struggling with a heavy burden of non-performing loans – debts where the borrowers have failed to keep up repayments.

Friday's punishment marks only the second time the ECB has used its power to issue fines, through the so-called Single Supervisory Mechanism (SSM).

It slapped a €2.5 million penalty on Irish lender Permanent TSB in August for failing to keep enough liquid assets on hand.

The SSM branch of the ECB has since 2014 been the top banking regulator in the 19-nation euro single currency area.