ROME, Dec. 13 (Xinhua) -- Italy on Friday started the process of rescuing the troubled Banca Popolare di Bari, said local media reports, a move aimed at stabilizing one of the most indebted institutions in the country's banking sector.
According to La Repubblica, Corriere della Sera, and other Italian media, the cooperative lender, one of the largest financial institutions based in the southern part of Italy, revealed in recent weeks a capital shortfall of around 1 billion euros (1.1 billion U.S. dollars). The government's rescue plan would help reduce the capital shortfall and help stabilize the bank's operations.
The issue is a delicate one in Italy, since Banca Popolare di Bari is one of the most troubled institutions in a banking sector already seen to be among the most indebted and fragile in the European Union. What is more, a rescue plan would most likely mean the bank's nearly 70,000 shareholders could still end up losing at least part of their investments.
Italian media reported Friday that the rescue plan would allow the bank to write off non-performing loans and place the institution under state administration, which would include a government guarantee on the bank's debts in order to give the bank the liquidity it needs to operate.
European Union regulators and ratings organizations have called on Italy to shore up its banking sector, which has higher levels of non-performing loans, debt, and low capital requirements. The last three Italian governments have worked for the last three years on improving the banking sector's overall health.
