Green light for the EU Commission to a shield for banks – BBC

Il European Commission President Jean Claude Junker

The European Commission has authorized – on the basis of EU rules on state aid – the introduction in Italy of a guarantee scheme for banks until 31 December 2016. This is a precautionary measure. According to the commission, this “scheme” is in line with the guidelines of 2013 and similar schemes are already operating in several EU countries. Italy has asked to authorize the provision of liquidity that can be done to support solvent banks if needed.

Enable ‘if necessary’

the “ceiling” of the public guarantee for precautionary liquidity support to solvent banks, on which the European Commission has given the green light to Italy, it could be extended up to a value of 150 billion euro. The figure, anticipated by Wall Street Journal, is confirmed by government sources. The value of government guarantees will depend upon the “special cases.” This would be “a measure to reassure the markets,” and that is why the EU emphasizes that there are no expectations that it is used. But in fact, it is a tool that the government could trigger “if necessary.”

the surety mechanism

the mechanism is reminiscent of the bank guarantee. In the event of a recapitalization that is considered worthwhile but at risk, the State could provide the state guarantees and the investor who has doubts on the capital increase, would feel reassured. Meanwhile, today Unicredit has chosen its CEO: will Jean Pierre Mustier. The Milan Stock Exchange closed in positive (plus 1.57%). Among the banks that are feeling the most bearish, Monte dei Paschi di Siena (less than 2.44%).

June 30, 2016 ( change June 30, 2016 | 20:01)

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