Italy’s Visco Renews Call to Review European Bank-Crisis Rules

(Bloomberg) -- Bank of Italy Governor Ignazio Visco has renewed his call for a review of European rules on banking crises that limit the ability to help ailing lenders.

“A legislation initiative of the new European Commission to review the BRRD directive would represent the occasion to tweak current rules, in order to make the regulation framework more flexible and appropriate for the nature of the banking industry,” Visco, who also sits on the European Central Bank’s Governing Council, said in a Friday speech to Italy’s bankers in Milan.

The central banker focused his criticism on EU rules curbing state intervention that distorts competition, which he said can pose risks to financial stability. At least 10 Italian banks have required some sort of financial aid from taxpayers or industry peers over the last three years.

In 2017, the government committed as much as 17 billion euros to wind down Banca Popolare di Vicenza SpA and Veneto Banca SpA and won approval to provide 5.4 billion euros for the recapitalization of Banca Monte dei Paschi di Siena SpA. Banca Carige SpA is the latest lender facing possible state intervention as it struggles to find a market solution.

The Italian rescues have also prompted other calls to review the EU’s patchwork of state-aid and bank-failure rules as well as national insolvency laws. While Italy wants to make the framework more flexible, others have called for a tightening of the regulations to make it harder for states to rescue ailing lenders with taxpayer funds.

“Access to precautionary recapitalization should be facilitated to better deal with any possible market failures that limit the capacity of solvent banks to finance themselves and to prevent contagion risks,” Visco said.

--With assistance from Alexander Weber.

To contact the reporters on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net;Alessandro Speciale in Rome at aspeciale@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Dan Liefgreen

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