{"id":16800,"date":"2016-01-22T12:14:17","date_gmt":"2016-01-22T17:14:17","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16800"},"modified":"2016-01-22T12:14:17","modified_gmt":"2016-01-22T17:14:17","slug":"italy-races-to-defuse-e200-billion-bad-loan-time-bomb-with-bad-bank","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16800","title":{"rendered":"Italy Races To Defuse \u20ac200 Billion Bad Loan Time Bomb With “Bad Bank”"},"content":{"rendered":"

Italy Races To Defuse \u20ac200 Billion Bad Loan Time Bomb With “Bad Bank”<\/a><\/h3>\n

When Portugal \u201csurprised<\/a>\u201d senior Novo Banco bondholders with a \u20ac2 billion bail-in late last month, the market got an unwelcome reminder that euro periphery banks are far from \u201csolid.\u201d<\/p>\n

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Novo was supposed to house the \u201cgood\u201d assets salvaged from the wreckage of failed lender Banco Espirito Santo, but as it turned out, a lot of those \u201cgood\u201d assets were actually bad, and Novo ended up needing to plug a \u20ac1.4 billion hole. Initially, the plan was to sell assets but seizing \u20ac2 billion from bondholders ended up being a whole lot easier and far more efficient.<\/p>\n

News of the bail-in came just a week after Lisbon announced that a second bank – Banif –\u00a0would need state aid<\/a>\u00a0after running out of cash to repay a previous cash injection from the government.<\/p>\n

As we head into the weekend, periphery banks are back in the spotlight, only this time in Italy where\u00a0PM Matteo Renzi is scrambling to put the finishing touches on a plan to guarantee hundreds of billions of NPLs sitting on the books of Italian banks<\/strong>.<\/p>\n

Talks with the EU Commission \u201chave already dragged on for two years,\u201d\u00a0FT notes<\/a>\u00a0and need to be concluded over the next few days lest \u201cthe whole initiative should collapse.\u201d<\/p>\n

Of course Renzi missed what amounted to a deadline on \u201cfixing\u201d the problem under the old rules governing bank resolutions.<\/p>\n

One reason the Novo Banco and Banif bail-in and bailout (respectively) were pushed through in what appeared to be a kind of haphazard, ad hoc fashion was because\u00a0new rules came into effect on January 1 that would have put uninsured depositors on the hook for losses<\/strong>. The same rules require 8% \u201cof a bank\u2019s liabilities to be wiped out before public money can be used,\u201d FT adds.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Italy Races To Defuse \u20ac200 Billion Bad Loan Time Bomb With “Bad Bank” When Portugal \u201csurprised\u201d senior Novo Banco bondholders with a \u20ac2 billion bail-in late last month, the market got an unwelcome reminder that euro periphery banks are far from \u201csolid.\u201d Novo was supposed to house the \u201cgood\u201d assets salvaged from the wreckage of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[3855,11897,8386,3325,193,279,284,1464,6723,539,11898,4696,11895,741,11896,1068,4318],"class_list":["post-16800","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bad-bank","tag-banif","tag-borrowing-costs","tag-creditors","tag-davos","tag-eu","tag-european-union","tag-italy","tag-matteo-renzi","tag-monte-paschi","tag-novo-banco","tag-portugal","tag-sonar","tag-sovereign-debt","tag-sovereigns","tag-swift","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16800","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16800"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16800\/revisions"}],"predecessor-version":[{"id":16801,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16800\/revisions\/16801"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16800"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16800"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16800"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}