As a final deadline approached for Monte dei Paschi di Siena to pull off a last-ditch rescue plan, a state bailout for the ailing Italian bank looked certain. David Pollard reports.
This vote in the Senate gave the green light to a 20 billion euro rescue fund for a sector where many investors see just red. Italy's banks so saddled with bad loans that a bailout was all but certain. First on the casualty list: Monte dei Paschi. Its own rescue plan apparently failing to raise a target of five billion euros. Without it, Monte risks running out of funds in a matter of months. Even with it, the sector's problems still far from over. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "There is a very large problem in the Italian banking system in terms of non-performing loans. And that of course needs to be dealt with. The estimates are that it could be as high as 360 billion euros. And of course what we are seeing now is just a small injection of funds." In prospect now are ECB rules on how state bailouts should be done. Private investors would have to suffer losses before taxpayers. For a government which - after Matteo Renzi's referendum defeat - has only been in power for ten days - that's seen as politically explosive ... Given 40,000 retail investors hold bonds in Monte. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "It isn't going to deal with what is really at stake, which is an Italian economy which isn't growing very fast at all has these problems with people not be able to repay the loans they got before." One Italian newspaper suggests a bailout could take months. Until secured, the savings of thousands of Italians hang in the balance.