Published time: 20 Dec, 2016 10:53

The Italian government plans to increase the country’s sovereign debt by €20 billion ($21 billion) to help its banking system, starting with the world’s oldest lender Monte dei Paschi di Siena.

Italy's new Prime Minister Paolo Gentiloni calls it a precautionary measure. “We believe it is our duty to take this measure to protect savings. I hope all the political movements in parliament share this responsibility,” he said.

The country’s third largest bank started a share sale earlier this week to raise €5 billion to clean up its balance sheet. Monte dei Paschi hopes to avoid state aid, which essentially is the first step to its nationalization.

Losing over 80 percent of its market capitalization within a year, Monte dei Paschi is in the middle of the Italian banking crisis.

The government money could be used to ensure adequate liquidity in the banking sector and support other fragile lenders, according to Italy's Economy Minister Pier Carlo Padoan. “These resources could also be used as part of a program to boost capital at banks,” he said.

Should the privately funded rescue of Monte dei Paschi fail, a government bailout could begin as soon as this week.

Under the European bailout rules, investors cover all the losses if taxpayer money is used to rescue a bank. That makes the issue politically explosive for the week-old administration of the new prime minister.

“Gentiloni has to take a necessary but rather dangerous path. He has to find a balance between domestic pressure, including from within his Democratic Party, not to make taxpayers pay for rescuing banks, and sticking to European Union rules,” said Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University, as quoted by Bloomberg.

Source:

https://www.rt.com/business/370954-italy-bailout-billions-bank-pm/

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This is pretty comical. This is why:

From

https://en.wikipedia.org/wiki/Bank_of_America#Bank_of_Italy

...History

Bank of Italy
Main article: Bank of Italy (United States)

The history of Bank of America dates back to October 17, 1904,[1] when Amadeo Pietro Giannini founded the Bank of Italy in San Francisco. The Bank of Italy served the needs of many immigrants settling in the United States at that time, providing services denied to them by the existing American banks which were typically discriminated against them and often denied service to all but the wealthiest.[19] Giannini was raised by his mother and stepfather Lorenzo Scatena, as his father was fatally shot over a pay dispute with an employee.[20] When the 1906 San Francisco earthquake struck, Giannini was able to save all deposits out of the bank building and away from the fires. Because San Francisco's banks were in smoldering ruins and unable to open their vaults, Giannini was able to use the rescued funds to commence lending within a few days of the disaster. From a makeshift desk consisting of a few planks over two barrels, he lent money to those who wished to rebuild.[21][22][23]

In 1922, Giannini established Bank of America and Italy in Italy by buying Banca dell'Italia Meridionale, the latter established in 1918.[24][citation needed]

In 1928 Giannini merged his bank with Bank of America, Los Angeles, headed by Orra E. Monnette and consolidated it with other bank holdings to create what would become the largest banking institution in the country. Bank of Italy was renamed on November 3, 1930 to Bank of America National Trust and Savings Association, which was the only such designated bank in the United States of America at that time. Giannini and Monnette headed the resulting company, serving as co-chairs.[citation needed]...

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IZAKOVIC