Italy's new PM to seek Parliament's backing for €20bn loan to fund banks

Italy's new Prime Minister is to ask Parliament to back a move to borrow €20bn which would be used to help the country's troubled banks.

Paolo Gentiloni (pictured) describes it as a precautionary measure.

Italy's third-largest bank, Monte dei Paschi di Siena, needs to raise €5bn in new private capital to prevent a state bailout.

A government statement issued last night said Prime Minister Gentiloni, had convened a cabinet meeting to request the funds from parliament.

The statement said: “[It] could be necessary to adopt measures with the aim of protecting savers if there were risks in the financial sector”.

The Guardian reports that seven other banks may also require government recapitalisation.