The details of the plan for the liquidation of Banca Veneto and Banca Popolare di Vicenza and the involvement Banca Intesa have not been made public. We know from the press that Banca Intesa has offered a symbolic sum (1 euro) to acquire the porfolio of (relatively low risk) asset and liabilities which do not include Non Performing Loans nor junior bonds, in a move that would not affect it’s capital nor dividend. This raises a number of questions that the Italian government, the ECB and the other involved EU supervision authorities should answer:
- what is the official estimate of the difference between the market and the book value of the two banks’ Non Performing Loans , a gap that will be presumably footed by tax-payers (estimates in the press range from 5 to 10 billions)?
- what is the official estimate of the market value of the (low-quality) asset and liabilities that will be eventually transferred to a bad bank for the government to recover part of the losses?
- what is the official estimate of the market value of the (high-quality) asset and liabilities that will be eventually transferred to Banca Intesa? Does this estimate exceeds one euro, and , if so, what justifies the government subsidy to a private bank?
- what is the estimate of the private sector’s contribution in terms of bailed-in asset (junior bonds, shares and so on)?
- what is the cost for the Italian banking sector via its deposit insurance fund, or for any other public institution, of the guarantee on deposits below 100 thousand euros?
- is the Italian Government envisaging a bail-out of small investors holding junior debt, and if so, what is the cost for taxpayers and what are the eligibility criteria?
For the Italian Government, the EU institutions and the new Directive for Resolution to retain any credibility, these figures should be made public. Now.