Italy's government won a confidence vote on Wednesday on a decree aimed at helping the country's feeble banking system, including state-backed guarantees to help sell bad loans. Lower house deputies voted 351-180 in favour of the package put forward by Prime Minister Matteo Renzi, who would have had to step down in the event he lost the vote.
The decree will go to Italy's Senate, where it must be passed into law by April 7 at the latest or else it will expire. Renzi has called numerous confidence votes during his two years in office to accelerate the passage of legislation. The guarantee scheme aims to help banks and financial institutions shift some of the 200 billion euros ($223.28 billion) in bad loans that piled up on their balance sheets during three years of recession.
The plan to let banks pack the loans into securities for sale was wrung out of months of talks with the European Union, but Renzi's critics say it would favour banks over their clients. Bad loan fears helped wipe out almost 40 percent of Italian banks' value earlier this year. Their stocks have recovered on Milan's bourse but are still 25 percent down on the year.
The decree also contains measures to pull together under a holding company the 371 credit co-operatives that are currently tiny fragments in an unwieldy and expensive system. Credit cooperatives with assets worth at least 200 million euros, or that choose to make partnerships with lenders of that size, will be able to opt out of the new structure.
The holding company would have capital of at least a billion euros, and the Treasury would be able to sell off some of its share if it needed to raise funds on the market. The government has already forced big co-operative lenders to convert into joint-stock companies, hoping this would prompt them to merge. The measure did not bear fruit quickly, but the first such merger looked set to be announced later on Wednesday.
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