Editions:  Austria · Denmark · France · Germany · Italy · Norway · Spain · Sweden · Switzerland

Italian government to bail out struggling Banca Carige

Share this article

Italian government to bail out struggling Banca Carige
Photo: Alberto Pizzoli/AFP
11:59 CET+01:00
The Italian government has been accused of hypocrisy over the decision, after previously saying it wouldn't give "one euro" to the banks.

The government yesterday decided it would come to the aid of floundering Banca Carige in a surprise move.

Faced with a potential bank failure, the cabinet approved state guarantees for any future bond issues by ailing Banca Carige and indicated that nationalisation could be on the cards.

The collapse of the Genova-based bank would hit thousands of savers, many of them in Deputy Prime Minister Matteo Salvini’s northern Italian voter base.

The announcement marks an abrupt switch from the ruling coalition government's previous stance against the banks.

Their anti-bank rhetoric now appears to have gone the same way as last year’s pledges to defy the European Union over the budget, with ministers now saying instead they will “safeguard the rights and interests of savers.”

READ ALSO: Italy has reached a deal with the EU over its 2019 budget

The decision was reportedly made by the government's two deputy prime ministers at a short and hastily-called meeting last night.

Rome stated it is working in "close coordination" with EU institutions which the government has also previously been heavily critical of.

The measures follow on from the recent decision of the European Central Bank to install temporary administrators at the bank, the government said in the statement.

The ECB said last week it had appointed three temporary administrators "to steer the bank in order to stabilise its governance" after most of the bank's board resigned.

The measures should allow these administrators "to take the initiatives needed to preserve the stability" of the bank, the government said.

Carige would be able to obtain "some State guarantees" or "financing" from the Bank of Italy.

The decision to intervene comes as a surprise after the government, particularly the Five Star Movement which rules in coalition with the League, had pledged countless times to voters that, unlike the previous government, it would not give "one euro" to the banks.

READ ALSO: Fraud trial of two Italian ex-banking chiefs begins

Former prime minister Matteo Renzi and other political opponents from the Democratic Party (PD) accused the government of hypocrisy.

"Salvini and Di Maio have made a decree that “saves the banks with the money of Italians,” exactly as they accused us of doing," said Ettore Rosato, PD politician and Vice President of the Chamber of Deputies.

“But were the banks not the enemy that had to be made to fail?” he asked.

Responding on Facebook, Co-Deputy Prime Minister Matteo Salvini defended the government's apparent change of heart.

"While Renzi ignored and forgot about savers, we intervened immediately in their defence without favouring the banks, foreigners, or friends of friends," he said.

Analysts warned that the bailout could affect borrowing and increase Italy's public debt.

Italian market watchdog Consob has halted trading in Carige's shares which plunged after its board failed to agree on a capital increase,

The 400-million-euro capital increase was one pillar of a restructuring plan approved by the ECB.

Carige shares have lost almost 90 percent of their value over the past three months on the Milan stock market to trade at well below one euro cent.

And ratings agency Fitch in October lowered its credit rating to CCC+ with a negative outlook, warning that bankruptcy was "a real possibility."

READ ALSO: Did Italy illegally bail out Alitalia? EU investigates

Get notified about breaking news on The Local

Share this article