EU unwittingly fuels rise in anti-Brussels 5Star by allowing Italy to break bailout rules
ITALY appears to have scored an own goal against right-wing movements in its country after pressing ahead with an unpopular banking bailout.
EU unwittingly fuels rise in anti-Brussels 5Star by allowing Italy to break bailout rules
The state has gone ahead with a €5billion liquidation of two banks, Veneto Banca and Banca Popolare di Vicenza, despite public distaste for the move.
Five Star Movement (5SM), Northern League and the Forze Italia party have all rounded on the centre-left Democratic party as a result.
The banks’ healthy assets will be transferred to Banca Intesa Sanpaolo, the nation’s largest bank, which will get €5billion in funds.
Carlo Sibilia from 5SM said: “This is a €5billion gift of Italian citizens’ money to the banks and the bankers, to save them from their nefariousness and their robes; from loans they made to their friends.”
“This is a €5billion gift of Italian citizens’ money to the banks and the bankers, to save them from their nefariousness and their robes; from loans they made to their friends
Rome managed to agree a last minute save with Brussels, using a hastily written decree.
With just months to go before elections in the country, it was a gift for prime minister Paolo Gentiloni who could have seen huge backlash from investors.
Under new EU rules, senior bondholders at the stricken banks would have had to cough up in the bailout.
Italian prime minister Paolo Gentiloni
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Germany, as well as other EU nations, accused Rome and Brussels of sidestepping Brussels rules.
And commentators are already predicting a political backlash.
Giovanni Osina, political science professor at Luiss University, Rome, said: “The Democratic Party is already in trouble, so this will be a problem in the election campaign, it will be shoved in their face a thousand times.”
Northern League will be particularly pleased with the outcome, it is predicted, since both banks are inside its “electoral heartland”.
Italy’s centre-right is experiencing a resurgence in the country - leading to criticism of PD leader, former Prime Minister, Metteo Renzi.
However, the Government has fiercely defended the move to defend the banks.
Under new EU rules, senior bondholders at stricken banks would have had to cough up in a bailout
PD lawmaker Alessia Morani said: “Some say that the money should have gone to the poor instead of the banks. But how many more poor people would there be if banks were allowed to fail? It would be social butchery.”
Roberto Guiltier, MEP for the PD said: “The problematic cases have been reduced, the banking system is more secure, with limited costs - and potentially none - and according to the rules.
“We defused mine.”