In January, the populist government in Italy decided to intervene on behalf of ailing lender Banca Carige to stave off its collapse. The cabinet pledged to guarantee future bonds issued by the Genoa-based lender, which has been limping along since a make-or-break €400m capital increase failed to get off the ground last year.
If this sparks feelings of déjà vu, then that is no coincidence. Two years ago, Italy’s then centre-left government under Matteo Renzi engineered a similar manoeuvre for Banca Monte dei Paschi di Siena (BMPS), via a “precautionary recapitalisation”.
