Italy set to follow Britain in bank-bail out

Oct 8, 2008, 15:26 GMT

Rome - Italian Economy Minister Giulio Tremonti indicated Wednesday that Italy could follow Britain's example in fashioning a financial crisis package.

A government statement said Tremonti 'agrees with the measures announced this morning by the British government,' a reference to London's rescue package for leading banks of 50 billion pounds (87 billion dollars).

Italy's economy minister earlier met representatives of the Bank of Italy and banking and industry leaders in Rome, to discuss the current crisis which has seen shares of the country's second-biggest lender, UniCredit, lose heavily on the Milan Bourse in recent days.

The Italian government also announced that Prime Minister Berlusconi had summoned his cabinet to meet later Wednesday to examine 'urgent measures to guarantee the stability of banks and savings.'

Berlusconi has said that Italians will 'not lose even 1 euro' of their money held in bank accounts, and has pledged government action to protect the country's lending institutions from attacks by speculators.

The Italian state already guarantees deposits of up to 100,000 euros (136,000 dollars) per depositor, and officials and many analysts have said Italian banks, which follow stricter lending policies, are less exposed to creditor defaults than their counterparts abroad.

But UniCredit's performance has created jitters, with the bank's shares suspended from the Milan Bourse for a period on Wednesday after losind 10 per cent in morning trading.

UniCredit has announced cuts of 700 investment banking jobs, a fifth of the unit's workforce.