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EUROPEAN UNION

EU gives go-ahead to Italian rescue of troubled BMPS, the world’s oldest bank

The EU anti-trust authority approved Italy's massive rescue of the country's troubled third-largest bank, Monte dei Paschi di Siena (BMPS), a statement said on Thursday.

EU gives go-ahead to Italian rescue of troubled BMPS, the world's oldest bank
The logo of the Monte dei Paschi di Siena bank is seen on the window of a branch in downtown Rome. Photo: Filippo Monteforte/AFP

Founded in Siena in 1472, BMPS has been in deep trouble since the worst of the eurozone debt crisis, with the Rome government set to take a majority stake on a provisional basis to save the bank from bankruptcy.

“This solution is a positive step forward for BMPS and the Italian banking sector,” EU Competition Commissioner Margrethe Vestager said in a statement.

“It would allow Italy to inject capital into BMPS as a precautionary plan, in line with EU rules, whilst limiting the burden on Italian taxpayers,” she added.

Under the deal, the Italian government will inject an unspecified amount of cash after the lender failed to raise funds on the market last year.

In exchange, Rome must accept a drastic EU-approved restructuring plan for BMPS that reports said involves mass layoffs and salary caps for senior managers.

ANALYSIS: Here's what you need to know about the crisis at BMPSHere's what you need to know about Italy's banking crisis
Marco Morelli, chief executive of BMPS. Photo: Giuseppe Cacace/AFP

The ECB in December said BMPS, the world's oldest bank, was short a staggering 8.8 billion euros in capital.

The deal is fraught with political and economic complications for a centre-left government preparing for an election in the coming months.

Weakened by the disastrous purchase in 2007 of the Antonveneta bank, BMPS quickly drifted into scandal when its management team was accused of fraud and misuse of funds.

Reports earlier this year said the heavily indebted Italian government will need to inject some six billion euros in the lender.

The rest will be raised through the forcing private lenders to the bank to become part owners, a controversial process to be overseen by the ECB.

The state of Italian banking sector has become a big worry for the 19-member eurozone, with Rome still failing to resolve the problem of piles of risky loans sitting on bank books.

READ ALSO: How Italy's banking crisis has affected everyday life in SienaHow Italy's banking crisis has affected life in Siena
Photo: Giuseppe Cacace/AFP

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MONEY

Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.

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