Italy seeks billions to shore up troubled banks if needed

MILAN – Italy’s new government is asking parliament to approve up to an additional 20 billion euros ($21 billion) in funding to rescue Italy’s troubled banks, if necessary.

The Cabinet approved the measure late Monday, as Italy’s third-largest lender, Monte dei Paschi di Siena, is seeking to raise 5 billion euros in the markets to stay afloat. Investors signalled their doubts about the operation, with its share price dropping by 11 per cent before the government’s announcement.

Parliament must vote before the new funding can be allocated.

Concern that Monte dei Paschi may need a state bailout before year-end comes amid broad concerns about Italy’s banking system, which is weighed down by some 360 billion euros in bad loans that banks will struggle to repay due to the weak economy.