'A grave mistake' Germany FURIOUS as Italy allowed to break EU banking rules
Germany has lashed out at bureaucrats in Brussels after it allowed Italy to bend official rules, clearing Rome to pump billions of taxpayers' cash into struggling banks.
Germany has hit out after Italy has been allowed to bend EU rules. Source: Getty
Politicians in Berlin said the European Commission made a "grave mistake" that "discredited" the EU's banking union when it allowed Italy to side-step official rules.
Bank investors are now supposed to swallow some losses if state cash is used to bailout or rescue banks.
But Rome has resisted the rules, as many retail investors are ordinary Italian savers who would be set to stage a fierce backlash against the Government in the event of suffering losses.
Over the weekend, Italy's government was allowed to cut a deal that will cost it £14billion (€17bn) as the good assets of failed lenders Popolare di Vicensa and Vento Banca are taken over by the country's biggest retail bank Intesa Sanpaolo.
Markus Ferber, an ally of German chancellor Angela Merkel said the deal means that “the promise that the taxpayer will not stand in to rescue failing banks any more is broken for good”
German chancellor Angela Merkel last year ruled out a state rescue of Deutsche Bank amid fears the lender looked close to the brink.
And last month Spain adhered to rules, as Santander bought toxic lender Banco Popular for a nominal €1, in deal that saw shareholders lose everything.
It's thought Italy may have been allowed to bend rules to help the pro-EU government amid growing support for the anti-Brussels 5-Star movement.
But across the eurozone, and especially in Germany, the move has created anger.
Carsten Schneider, a Social Democrat Bundestag whip and budget policy expert, reportedly said: “This decision will discredit continuing the completion of the banking union and moves the common deposit-guarantee scheme into the distant future.
"It cannot be that bank wind-downs under national rules offer better conditions for creditors than under the European regime.”
He added that the Italian government’s decision was “a grave mistake”.
Philippe Lamberts, a Belgian Green party member of the European Parliament negotiated and helped write the banking law introduced last year, told the Financial Times: "It was all for nothing.
"This is a bad day for Europe. It's another hit to European integration.”