The European Commission on Sunday (25 June) approved a €17-billion plan by the Italian government to save two failing banks.
The Italian government will appoint special administrators for two ailing Veneto-based regional banks which are being wound down under national insolvency procedures, a source with knowledge of the matter said on Sunday.
Padoan said 4,785 billion euros would be set aside immediately to "maintain capitalisation" of Intesa Sanpaolo, which has made that a condition of any cooperation.
That hardly changed after San Francisco Fed President John Williams said the US central bank needs to keep raising rates gradually with the USA economy at full employment and inflation set to hit the Fed's two-percent target next year.
The EC's competition commissioner, Margrethe Vestager, said allowing Italy to use state aid would "avoid an economic disturbance in the Veneto region".
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Takata says on its website that its products have kept people safe, and it apologizes for problems caused by the faulty inflators. As the public continues to observe the bankruptcy proceedings, be sure to check if your vehicle could be part of the recall .
The government was expected to quickly hold a Cabinet meeting to decide about taking on the banks' deteriorated assets, a cost estimated at some 8 million-10 million euros (nearly $9 million-$11 million).
"Italy will support the sale and integration of some activities and the transfer of employees to Intesa Sanpaolo", and said the action will "also remove $18 billion ($20 billion) in non-performing loans from the Italian banking sector and contribute to its consolidation".
The 19-member eurozone has expressed concern at the perilous state of some Italian banks as Rome tries to address piles of risky loans sitting on the books of some of them.
The two Veneto banks reflect the weakness in Italy's banking sector, which is struggling to digest about EUR200 billion in bad loans and has suffered from low profitability and insufficient capital for years. Italian media reported that Intesa Sanpaolo's taking over the troubled banks could lead to thousands of layoffs and the closing of hundreds of small branches.
The European Central Bank said Banco Popular was "failing or likely to fail" due to its dwindling cash reserves. That means the total cost could reach €17 billion.
Some European officials have voiced exasperation at the way Italy has dealt with a string of trouble spots in its banking industry, which is weighed down by almost 350 billion euros of soured debts - a third of the euro zone's total. At the end of a year ago, it had to promise billions of euros to rescue Monte dei Paschi, the world's oldest operating bank.
European Union bank bailout rules require investors (shareholders and bondholders) - rather than taxpayers - to shoulder the burden of any rescue.
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