World Economy

No Blockage of Italy Bank Fund

No Blockage of Italy Bank FundNo Blockage of Italy Bank Fund

There is no risk that European authorities will block a bank fund set up by Italian financial institutions to shore up weaker lenders, Italy’s Economy Minister Pier Carlo Padoan told financial newspaper Il Sole 24 Ore on Wednesday, CNBC reported. Bank of Italy Director General Salvatore Rossi said the vehicle did not increase systemic risk for Italian banks. On Monday, Italy’s UniCredit and Intesa Sanpaolo , state lender CDP and others agreed to create a fund with a war chest of up to €6 billion ($6.8 billion) that would help buy shares in upcoming stock issues at distressed lenders and purchase non-performing loans. Shares in Italian banks closed in negative territory on Tuesday, weighed down by doubts over how the fund will function. “The state plays no role in the initiative ... so I do not see any risk,” Padoan said about the possibility the fund could violate European state aid rules.