Sven Giegold

Monte dei Paschi: New subsidies put the credibility of the banking union at stake

The EU Commission and the italian government have struck a deal how they want to give the Italian bank Monte dei Paschi di Siena (MPS) access to new banking subsidies. In the framework of a “precautionary recapitalisation” the strong bail-in rules in the banking union are undermined. Greens in the European Parliament have fought tooth and nails against this loophole in the legislative process but could not close it fully. The implementation of the deal is still depending on the confirmation of the European Central Bank as a supervisor. The ECB is asked to confirm that MPS is solvent and fulfills all capital requirements.

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:


“This is a misuse of special rules for political purposes. The credibility of the European banking union is now at stake. The trust in the new european banking law is now in the hands of the ECB. The ECB is now asked to prove with fresh and comprehensive data whether Monte dei Paschi di Siena is really solvent. The ECB may not rely its assessment on outdated and overly optimistic assumptions of the last EBA stress test. The asset quality review of 2014 is totally insufficient as data base.

I call on the Commission to make public immediately how it is guaranteed that the rules of the banking restructuring and resolution directive are respected. In particular the Commission has to demonstrate that the new banking subsidies are not used in order to cover losses which have already occurred or are likely to occur in the near future.

With this deal the Commission has created a dangerous precedent for new banking subsidies. Banking risks will continue to be mispriced in the market. Nevertheless, it was right that small private investors were protected from bail-in. But it was false that the italian taxpayer will have to pay for this.”

Category: Uncategorized

Please share!