Italy is readying a plan to steady its banking sector, a vulnerable target for sellers after Britain’s vote to leave the European Union raised fears of a market rout in the euro zone’s weaker economies, local newspapers said on Monday.
Italian bank stocks slumped on Friday on the outcome of the Brexit referendum, with UniCredit and Intesa Sanpaolo falling more than 20 percent each. Banking stocks opened mostly higher on Monday in choppy trade.
The industry is perceived as particularly vulnerable because it is saddled with 360 billion euros ($400 billion) of bad loans, a third of the euro zone’s total.
Daily newspaper Il Fatto Quotidiano said Rome’s plan could see the government take stakes in ailing banks and would be financed through the issuance of new public debt for around 40 billion euros.
The paper said Prime Minister Matteo Renzi’s government was already in talks with the European Commission about possible measures to support its lenders.
Two other dailies, Corriere della Sera and La Repubblica, said Italy would seek to take advantage of possible exemptions to European state-aid rules in case of “exceptional events” in order to bolster its banks if stocks continued to fall sharply.
Renzi was due to meet French President Francois Hollande and German Chancellor Angela Merkel in Berlin later on Monday to discuss the impact of the Brexit vote, and would seek support for the Italian measures, the papers said.