Italy (2008) Capital Injections

The Journal of Financial Crises: Vol. 3 : Iss. 3, 228-253

Yale Program on Financial Stability Working Paper Forthcoming

27 Pages Posted: 13 Dec 2021

See all articles by Manuel León Hoyos

Manuel León Hoyos

Yale School of Management - Program on Financial Stability

Date Written: November 12, 2021

Abstract

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 (€1.45 billion), Banca Popolare di Milano (€500 million), Credito Valtellinese (€200 million), and Banca Montepaschi di Siena (€1.9 billion), for an overall amount of €4.05 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.

Keywords: banks, capital injections, financial crisis, Italy, recapitalization, Tremonti bonds

JEL Classification: G01,G28

Suggested Citation

León Hoyos, Manuel, Italy (2008) Capital Injections (November 12, 2021). The Journal of Financial Crises: Vol. 3 : Iss. 3, 228-253, Yale Program on Financial Stability Working Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3981065

Manuel León Hoyos (Contact Author)

Yale School of Management - Program on Financial Stability ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States

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