Italian lenders Banca Popolare di Vicenza and Veneto Banca are struggling to recover from a surge in bad loans, made worse by a mis-selling scandal which has led many account holders to pull their savings.
In an effort to reassure savers, Italy’s finance ministry issued a statement on Thursday, saying that a dialogue with European authorities was underway to find a solution which will guarantee the two banks’ stability.
“In the context of liquidity, Banca Popolare di Vicenza and Veneto Banca have all the public guarantees necessary. The government is working to come to a solution rapidly,” the statement was quoted by the Financial Times as saying.
The country’s banking pains come amid a rise in populism, with polls indicating that the populist Five Star party could win national elections, which may come as early as this fall.