European regulators under fire over Italian bank bailouts

German Finance Minister Wolfgang Schaeuble on Monday warned that eurozone banking rules required reform, amid criticism that recent rescues of Italian banks failed to heed the lessons of the financial crisis.

European regulators under fire over Italian bank bailouts
German Finance Minister Wolfgang Schaeuble pictured during last week's G20 summit in Hamburg. Photo: Christina Sabrowsky / dpa / AFP

European regulators have come under fire for allowing Rome to use taxpayer money to save two small Italian banks, Veneto Banca and Banca Popolare di Vicenza.

The EU-approved operation could cost the Italian state up to 17 billion euros ($19 billion).

“In light of recent events, we need to look closely at whether our tools are sufficient, if they are effective and if we can do more,” said Schaeuble, the eurozone's most influential finance minister, as he arrived for talks with his counterparts from the 19-country single currency bloc.

Schaeuble said he regretted the disparity between national rules and the far tougher European rules that only apply to eurozone's biggest lenders.

“We must have a discussion on how we can change that in the future,” he said.

In the bailout, the two failing lenders' healthy assets are to be sold to Intesa Sanpaolo, Italy's strongest bank, for a symbolic price of one euro.

Last week Brussels also approved the bailout of another troubled Italian bank, Monte dei Paschi di Siena (BMPS), in a 5.4-billion-euro deal.

Critics say the bailouts run against the spirit of EU rules that are meant to protect taxpayers from being landed with the price of banking failures.

“We need a situation where everyone follows the rules,” said Austrian Finance Minister Hans Joerg Schelling before the ministers were to review the rescue with EU officials.

Eurogroup head Jeroen Dijsselbloem said the eurozone would table fresh proposals on the EU's so-called banking union by the end of the year.

“There are huge problems (in Italy) and we need to make sure that these type of problems don't occur in the future,” said Dijsselbloem, who is also Dutch finance minister.

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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.