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Italy (2008) Capital Injections

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In response to the 2007-09 Global Financial Crisis, in October 2008, the Italian government announced urgent measures to guarantee financial stability and the flow of credit. The Italian government targeted three areas of support: (1) bank recapitalizations, (2) liquidity access, and (3) expansion of guarantees on bank deposits. This case study exclusively examines the Italian bank recapitalization scheme introduced in December 2008 in line with European Union State Aid rules. The four Italian banks recapitalized in 2009 under the scheme were Banco Popolare (EUR1.45 billion), Banca Popolare di Milano (EUR500 million), Credito Valtellinese (EUR200 million), and Banca Montepaschi di Siena (EUR1.9 billion), for an overall amount of EUR4.05 billion. The government purchased special bonds issued by banks. These bonds became known as "Tremonti bonds," and Italian regulators agreed to treat them as core Tier 1 regulatory capital.:

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  • Leon Hoyos, Manuel, 2021. "Italy (2008) Capital Injections," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 3(3), pages 228-253, April.
    • Handle: RePEc:ysm:ypfsfc:331414
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1224&context=journal-of-financial-crises
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    1. Laura Bartiloro & Luisa Carpinelli & Paolo Finaldi Russo & Sabrina Pastorelli, 2012. "Access to credit in times of crisis: measures to support firms and households," Questioni di Economia e Finanza (Occasional Papers) 111, Bank of Italy, Economic Research and International Relations Area.
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    Keywords

    banks; capital injections; financial crisis; Italy; recapitalization; Tremonti bonds;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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