Italy seeks EU green light by end-2022 to revive bad loan guarantee scheme
-
Loading... - Chedad Maroc
- 26 Oct 2022
- 72 Views
- 0 Like
- 0 Comment
Italy is working to bring back a state guarantee scheme for up to 36 months to help banks shed bad loans and hopes to secure a green light from European Union by the end of the year, three sources familiar with the matter said.
Rome is in talks with the European Commission to renew the “GACS“ scheme, which expired in June, and plans to tighten the terms under which the state provides a guarantees to investors in bad bank loans repackaged as securities – known as securitisations.
The EU vets such measures to ensure compliance with the bloc’s state aid rules.
The renewal comes as the euro zone’s third largest economy is in the early stage of a recession triggered by sky-high energy costs, and as the banking industry braces for a surge in corporate defaults.
Initially expected after the summer break, the renewal has progressed more slowly than anticipated, meaning some bad loan deals due by Dec. 31 will now proceed without the guarantee scheme and will be restructured once it is reintroduced.
Talks with EU authorities are expected to be finalised by the end of this year, with the GACS scheme operational again in 2023, the sources said.
Italy wants to agree a two-year renewal of the scheme, with the option of extending it for a further 12 months after that, the people added.
The Treasury has changed the scheme to make it less generous for banks and to increase protection for taxpayers, reducing the chances they will have to bear the costs. Read More...
