Italy’s specialist pension funds asked to join in bank bailout

Specialist Italian pension funds will consider a government request to pour money into a bank bailout fund, days before European stress tests are expected to show the country’s third-largest lender is in need of urgent capital.

The Italian government is looking for ways to support struggling lenders without breaking EU state aid rules that require investors to take a hit first to shield taxpayers.

Monte dei Paschi, Italy’s third-biggest bank by assets, is likely to be found short of capital under an adverse scenario when EU stress tests results are announced on Friday.

The chairman of ADEPP, the association of sector-specific pension funds, said the government had asked association members to invest in the state-sponsored Atlante fund, which is working with Monte dei Paschi on the sale of €10bn in bad debts after writedowns.

“The government has made a request,” said Alberto Oliveti, adding that each pension fund would decide independently after a meeting of association members late yesterday.

He would not comment on media reports that the funds could contribute €500m in total.

Italian state financing agency Cassa Depositi e Prestiti is ready to provide up to €500m and a similar amount would come from SGA, another treasury-controlled entity.

Their contributions must be limited to a minority stake to avoid breaking state aid rules.