Italy wants to add another $ 21 billion to a massive burden of debt in order to keep their banks afloat.
The Italian government said late Monday night that asks the Parliament to give him a loan of euro20 billion ($ 20.8 billion) for the potential of the plan to rescue banks in the third largest economy in the Eurozone. Burdened with hundreds of billions of dollars of bad loans, the banking sector has become a major concern for investors in recent months.
The weakest lender, Monte dei Paschi di Siena (BMDPF) scrambles to get a euro5 billion ($ 5.2 billion) from investors. If the plan fails, the government will likely have to close the world's oldest operating Bank.
Italy's largest Bank, UniCredit, announced plans last week to raise euro13 billion ($ 13.5 billion) and cut thousands of jobs to boost its finances. The uncertainty caused by the resignation of Prime Minister Renzi, during which the constitutional reform was rejected by the Italians in the referendum, has brought down banking stocks. Successor Renzi, Gentiloni, said at a press conference late on Monday evening that he wants to get permission to borrow a huge amount as a "precautionary" measure in response to potential risks in the financial sector.
Public debt in Italy has reached $2340 billion 136% of GDP, the second highest ratio in the EU after Greece. The Italian government is trying hard to fix the problems in the banking sector of the country, which has amassed more than $ 370 billion of non-performing loans in the years of recession. Italy has more Bank branches than pizza, according to the Organization for economic cooperation and development, and they struggle with high costs and low profitability.
sections: Economics, World News