World’s oldest bank faces uphill battle with EU trying for another bailout.

Italy’s third-largest and the world’ oldest bank, Monte dei Paschi de Siena, is on the point of collapse unless it receives state support. Its failure could spark a banking crisis in Europe, but EU rules forbid bank bailouts using public funds.

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Alarm bells have gone off ahead of the results of European stress tests, due to be released at the end of July that will reportedly reveal Italian capital needs. Because of the concerns investors are staying away from the recapitalization of the country’s banks.

According to the IMF, Banca Monte dei Paschi di Siena has over $400 billion (€360 billion) of non-performing loans. Experts expect the bank to become the worst performer with the risk of its failure likely to shake the Italian banking system.

The bank has already been bailed out twice, but is likely to need a third multibillion euro cash injection from the government.

EU regulations ban member states from using public money to support failed banks. If Italy follows the rules imposed by Brussels, several national banks will become insolvent.

The collapse of Italy’s oldest bank is likely to jeopardize the political fortunes of Italy’s Prime Minister Matteo Renzi, who is now facing the hardest challenge of his tenure.

The post-Brexit turmoil, sparked a massive selloff of banks stocks in Europe, and left Monte dei Paschi trading at less than one-tenth of book value.

The downfall of the world’s oldest bank, Banca Monte dei Paschi di Siena, in one chart! pic.twitter.com/Gm5ljxD8AM

— jeroen blokland (@jsblokland) July 9, 2016

The bank, which was founded in 1472, is not failing according to the Wall Street Journal. It only needs capital not to fall below the minimum requirements of the stress test.

Italian ‘zombie’ banks may trigger financial crisis in #EUhttps://t.co/Mwkl4SF5Cgpic.twitter.com/TEUfv8iqXq

— RT (@RT_com) July 6, 2016

In this case, European law allows governments to use tax payer money for a ‘precautionary recapitalization’ under strict conditions. The step can be taken if a bank is seen as solvent, with no chance to raise money privately as well as to use the capital to patch recent or future losses.

The Euro is Dead, Open Your Eyes – German Politician / Sputnik International

‘If Euro Fails, Europe Fails’: Merkel Urges Compromise as Greek Default Looms

Prominent German politician Oskar Lafontaine has called for the abandonment of the single European currency, in an interview with the Der Spiegel magazine.

German federal chancellor Angela Merkel, talks with Greek prime minister Alexis Tsipras

In an interview with the Der Spiegel magazine, the former chairman of Germany’s Social Democratic Party, Oskar Lafontaine, has called for the abandonment of the single European currency.

According to him, the biggest mistake in creating a single currency union was the fact that the process was not preceded by the formation of a new political association.

“The euro has already collapsed, we should not cherish illusions,” Lafontaine said, calling the single European currency “a step backward in the framework of the historic project of European integration.”

He added that the euro cannot function “without a European economic government,” and that the unemployment, imposed by the German government, “cannot become the basis for European unity.”

Lafontaine apparently referred to the ongoing crisis in Greece, which many analysts claim was sparked by a spate of austerity measures that were in turn imposed by Germany.

From Lafontaine’s point of view, Greece must turn back to the Drachma, its former currency, to regain its footing. “It is absolutely clear that Greece cannot achieve economic progress amid the current harsh conditions of the single currency”, he concluded.

via The Euro is Dead, Open Your Eyes – German Politician / Sputnik International.

EU agree on Greek bailout after Athens agrees to ‘serious economic reforms’ | Daily Mail Online

Despair: A elderly man in a wheelchair sits with his head in his hands as he waits to enter a branch of the National Bank of Greece in Athens today in the hope of withdrawing up to €120 from his pension

Eurozone leaders have struck a deal with Greece to negotiate a third bailout to save the near-bankrupt country’s economy after marathon all night talks in Brussels.

European Council President Donald Tusk this morning tweeted: ‘Euro summit has unanimously reached agreement. All ready to go for ESM programme for Greece with serious reforms and financial support.’

‘There are strict conditions to be met. Nevertheless, the decision gives Greece the chance to get back on track with the support of European partners. It also avoids the social, economic and political consequences that a negative outcome would have brought,’ he added.

It is these ‘strict conditions’ imposed by international lenders led by Germany that could bring down Prime Minister Alexis Tsipras’ leftist government and cause an outcry in Greece.

European Commission President Jean-Claude Juncker said there was no longer any risk of Greece leaving the euro after Athens agreed to the bailout terms, adding ‘Grexit has gone’.

However Greeks have already taken to social media using #thisisacoup to decry the terms of the deal, claiming the harsh terms strip Athens of its fiscal sovereignty. Users even accused Germany of ‘destroying Europe once again’, adding they ‘could not do it with tanks so now they try it with banks’.

via EU agree on Greek bailout after Athens agrees to ‘serious economic reforms’ | Daily Mail Online.