A Swift Solution for Bad Banks

22.12.2016 • Central Banks

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Kris Sayce – Port Phillip Insider (Australia) –

Trouble continues to brew in Europe. As the Financial Times reports:

Monte dei Paschi di Siena is to be rescued by the Italian state using a new 20bn bailout package, as a last-gasp private sector rescue plan for the world’s oldest bank looked set to fail, forcing losses on bondholders.

The government rescue, which had long been resisted in Rome, is designed to draw a line under the slow-burn crisis in Italian banking that has alarmed investors and become the main source of concern for European financial regulators.

The woes of Italy’s banking sector have also spilled over into the political sphere, contributing to the government’s defeat in this month’s constitutional referendum.

A private 5bn recapitalisation plan led by JPMorgan collapsed on Wednesday after MPS failed to find an anchor investor, a crucial plank of the deal, said four people close to the dossier.

Ah, what would Europe be without a banking crisis? This one has been brewing for some time. Although, it was knocked off the front pages when Germany’s Deutsche Bank AG [GR:DBK] got into trouble.

But now Banca Monte dei Paschi Siena SpA [IM:BMPS] is back on the front page, and it’s troubling the markets. The thing is, it really shouldn’t be that hard. If only meddling bureaucrats, politicians, and bankers wouldn’t insist on interfering with the processes of the free market…

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