Italian Gov't Plans to Provide $21 Bln to Aid Banking Sector

ROME (Sputnik) — Italian government is prepared to allocate 20 billion euros ($21 billion) to support the country’s banking sector and in particular the oldest European bank Banca Monte dei Paschi di Siena (MPS), which has been severely weakened in recent years, Prime Minister Paolo Gentiloni said.

Gentiloni and Minister of Economy and Finances Pier Cardo Padoan explained at a press conference late on Monday that the money would help "provide the necessary level of liquidity" in order to restore the potential of financing in mid- and long-term perspective and to strengthen assets of separate banks by taking recapitalization measures.

The rescue fund proposed by the government "is a precautionary measure," the prime minister underlined.

The proposal is reportedly set to be presented before the parliament for approval later this week.

According to media reports, MPS is struggling to create a consortium of banks to take part in the planned emission of 5 billion euros in stock in order to increase its capital. The bank estimates the money needed to solve its capital issues at 558 million euros.

MPS was created in Siena in 1472 and is currently the third largest Italian lender.

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