On Thursday the parliament approved government intervention to rescue the national banking system in the amount of €20 billion. It is yet another defeat for the Renzi-Padoan-Gentiloni government in financial policy, after a series of reversals that have filled the pages of newspapers in recent months.
The government had been reluctant to make a long-lasting move, in the presence of a banking system patently unable to make its way alone in the crisis. The revulsion against any public intervention by the members of Renzi government had to surrender to facts, but it did so only at the last minute and in more precarious conditions than if the move had been prepared calmly.
The decision comes at a dramatic moment for the Monte dei Paschi.
In a few hours, we’ve already learned that the hypothesis of an increase of only private capital has essentially failed, since the conversion of the subordinated bond initiative collected in total only about €1.7 billion, far shy of the €5 billion needed. It should be emphasized that since the crisis erupted, the Sienese institute burned through €8 billion.