Italy approves bank rescue plan

Oct 13, 2008, 15:22 GMT

Rome - Italy's government approved Monday a decree containing measures to shield the country's banks, Economy Minister Giulio Tremonti said, adding that the cost of the aid cannot be quantified at this stage.

Tremonti said the country's central Bank of Italy would evaluate struggling banks 'case-by-case' and then possibly recommend government intervention, which in extreme situations could involve placing a bank under state administration.

The state would also guarantee for a period of five years debts incurred by Italian banks up until December 31 2009, Tremonti said.

These guarantees will reflect 'market conditions' and would be applied using the same evaluation criteria when providing assistance to banks that needed to recapitalize, he said.

The Economy Minister made the announcement at a news conference following an extraordinary cabinet meeting in Rome scheduled in the wake of Sunday's emergency meeting of eurozone leaders.

Pressed by reporters who cited other governments in Europe that have provided an estimate of the amount of money needed to rescue their countries' banks, Tremonti said Italy's government would make the 'necessary' funds available and that these 'cannot be predetermined.'

The measures where 'in line' with measures taken elsewhere in Europe, Tremonti said.

Prime Minister Silvio Berlusconi, who is in Washington for an official visit, and Tremonti have repeatedly described Italy's banking sector as 'robust' compared to other European nations.

Monday's meeting served to approve a government decree proposed last week which also re-affirmed the state's commitment to guarantee bank deposits of up to 103,000 euros (138,000 dollars), Tremonti said.