Italians concerned over banking crisis

2016-12-11 05:57
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Rome - Talks on creating a new Italian government entered a decisive phase on Saturday as fears mounted that any new premier will have to handle a politically toxic banking crisis.

President Sergio Mattarella is trying to broker a deal among political parties on the creation of a caretaker administration to guide the country to elections.

A nationwide vote is due by early 2018 but could take place up to a year earlier if there is no deal.

Foreign Minister Paolo Gentiloni emerged as the pundits' favourite to succeed Matteo Renzi amid swirling speculation that the outgoing prime minister's re-appointment was also an option.

Renzi resigned after a crushing defeat in last weekend's referendum on constitutional reform, plunging the country into a political crisis just as the long-anticipated banking crunch landed in the finance ministry's lap.

Mattarella has spent the last two days talking mainly to fringe parties without sufficient numbers in parliament to sway the decisions he has to make.

Troubled bank

The real work began on Saturday with talks with junior coalition party the New Centre Right (NCD) to be followed by meetings with officials of the populist Five Star Movement, Silvio Berlusconi's Forza Italia and Renzi's Democratic Party.

Interior Minister Angelino Alfano, the NCD's leader, emerged to say there was no need to rush to elections.

"The government... is not like a yoghurt. It does not have a 'best-before' date," he said sardonically.

The need for a new government has become pressing following the European Central Bank's decision to reject Rome's request for more time to persuade investors to back a €5bn private bailout for troubled bank Monte dei Paschi di Siena (BMPS).

The bank, identified as being vulnerable to failure in stress tests last year, had asked for an extra five weeks to raise the funds it needs to avoid a government bailout under which, under EU rules, debt holders will have to share some of the losses.

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