Rome

Finance minister rules out bailout for MPS

State intervention to shore up capital, Grilli says

Finance minister rules out bailout for MPS

Rome, January 29 - Italian Finance Minister Vittorio Grilli on Tuesday ruled out a bailout for the country's third largest bank, Monte dei Paschi di Siena (MPS), at the centre of an unfolding derivatives scandal. "State intervention does not represent a rescue operation for an insolvent bank but rather the strengthening of its capital" according to European Banking Authority standards, said Grilli during a parliamentary hearing in reference to last week's decision by Italy's central bank to disurse 3.9 million euros to the Sienese lender to cover losses incurred in recent derivatives deals. "One of Italy's strong points is the recognised solidity of its banking system," he continued. "Our banks have shown unique abilities. Rescue operations are unnecessary. There is no need to sow doubt about the solidity of the system, it does not correspond to reality. Not even the problems of MPS alter this picture," concluded Grilli. The world's oldest bank came under fire early last week after it emerged that over 700 million euros had been lost in at least two derivatives deals that the Italian credit institution said it had only recently discovered. The scandal has rocked the country's financial establishment and also renewed criticism of the alleged mingling of banking and politics in Italy. MPS, through its foundation, has historically been linked to the centre-left Democratic Party (PD), which has long been dominant in Siena and the rest of Tuscany.

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