The liquidation of two Italian regional banks has showed the
limitations of the EU’s bank resolution framework.
It also opens a potential legal loophole allowing member states
to use their national insolvency rules to avoid applying
Veneto Banca and Banca Popolare di Vicenza (BPVi) were
bailed out earlier this week in what is so far the largest bank
rescue in Italy. Finance minister Pier Carlo Padoan said the
government had initially committed €5 billion ($17.1
billion) to the cleanup of these two banks, which were
previously ranked in the top 15 largest lenders in Italy. The
total cost to the taxpayer could reach as much as €17
billion, which also includes state guarantees for losses
stemming from non-performing loans (NPLs). Intesa Sanpaolo
agreed to buy both banks’ performing loans and
deposits for a symbolic euro.
Veneto Banca and BPVi are hitting troubled
watersThe situation stands in...