Italy, EU race to find solution for two troubled banks

Bloomberg

Italian finance officials and the European Commission are racing to find a solution for two troubled banks in the northern Veneto region that have weighed on the nation’s financial system.
Finance Minister Pier Carlo Padoan said the matter of Veneto Banca SpA and Banca Popolare di Vicenza is being worked on “actively,” without offering details. European Commission Vice President Valdis Dombrovskis told a news conference in Luxembourg that he was in close contact with the Italian authorities but declined to comment
further.
Rome’s la Repubblica newspaper said that the Italian government and bank managers are seeking to reach an agreement “by the end of next week.” Padoan said June 13 an accord with the Commission in Brussels on the Veneto banks was “close.”
Still there were differing news media accounts of the status of the talks with European Union officials who will need to sign off on any state
involvement.
La Stampa, quoting officials in the EU and the Treasury in Rome, said the current rescue plan has been determined to be not feasible. The newspaper said a split into a “good bank” for the assets and a “bad bank” for deteriorated credit was one possibility.
In London, however, the Sunday Times said the European Commission was expected to approve a rescue package this week. The two lenders need a total of 6.4 billion euros ($7.2 billion), according to the
Sunday Times.
Padoan, at an event in Bologna on Sunday, said the parties were heading toward an “important conclusion” on troubled lender Banca Monte dei Paschi di Siena SpA, without providing details.
Separately, Fortress Investment Group LLC and Elliott Capital Management dropped out of talks to buy bad loans from Monte dei Paschi, complicating the government-backed rescue plan, according to two people with knowledge of the matter.