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Blackrock has pulled out of a possible deal to rescue Carige. Watch out for the possible political storm in the making. (@Reuters) uk.reuters.com/article/uk-eur…
Once again, a private solution touted for an Italian bank in trouble falls apart. Remember JPMorgan with MPS? That did not go well either. #Carige
Other Italian banks have said they stand ready to support Carige via a voluntary deposit guarantee scheme. This smells very much of the Atlante fund, which did not work out too well since the banks it bought were ultimately liquidated.
The Italian government is also ready to inject some money into Carige. This is pretty ironic, since 5 Star has railed repeatedly against previous administrations pouring money into the banking system (@bopinion) google.co.uk/amp/s/www.bloo…
The question is whether the ECB and the European Commission will allow a precautionary recapitalisation of Carige. This instrument was designed to remedy serious disturbances and preserve financial stability. Carige would set the bar for this tool pretty low.
Blackrock would have solved a big problem for Italy’s government and supervisors. But the deal did not happen in the end. Expect some embarrassment for the Italian government if it chooses to intervene - and perhaps a new bust up with the rest of the EU. (ends) #Carige
