Bad Banks

If you are not already aware Banca Popolare di Vicenza missed its target to raise cash through a share sale recently and missed by a very long way indeed. 

A consortium of other Italian banks and financial institutions has set up a fund specifically to assist distressed Italian banks. 

The funny thing is that a number of these banks are, in themselves, struggling with large books of non performing loans and bad debts. 

So, in steps the Government.  The Italian government are currently in the process of setting up a 'bad bank' which will take these non performing loans and sell them on the distressed debt market.   

In the meantime, the Italian banks will continue to rob Peter to pay Paul.  However, pushing the pessimism aside, the bad bank idea is a good one and something that has worked for both the USA and the UK.