Italian Bank Shares Recover
Italy's pledge to aid banks in case of need was designed to rebuild confidence in markets and keep the financial system running, not because of worries that deposits would be lost, Italian Premier Silvio Berlusconi said Thursday.
Among the emergency measure passed Wednesday night, the government would step in to guarantee deposits up to the currently insured level of euro103,000 (US$140,900) should a bank be unable to repay the sum. The move gave bank stocks a boost in Milan trading Thursday, with shares of Italy's largest bank Unicredit rising as much as 8 percent to euro2.65 (US$3.63).
Speaking at a news conference with his Romanian counterpart, Berlusconi said the measure wasn't taken "to protect depositors, because that isn't a worry. The main reason for our intervention was to allow banks to operate" in a way that keeps the country functioning.
Italy's main business lobby Confindustria has been emphasizing the need for banks to continue to extend credit to businesses.
Berlusconi repeated that no Italian bank would be allowed to fail and no depositors would lose their savings because the banking sector remains solid.
He said nationalizing Italian banks was not foreseen as a necessary measure, but added that if the government were to intervene it would receive preference shares without voting rights.
That statement follows Britain's announcement on Wednesday that it would buy stakes in its national banks in order to recapitalize the financial sector.
Italian Finance Minister Giulio Tremonti told Parliament on Thursday that the government would be able to aid the banks without violating its pledge to keep the deficit within 3 percent of GDP.
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