Italy act to bail out two more banks

Italy'government is rescuing two banks facing bankruptcy by paying up to 17 billion euros (19 billion US dollars).

"The total resources mobilized could reach a maximum of 17 billion euros – but the immediate cost to the state is a little more than five billion," said Finance Minister Pier Carlo Padoan.

Italian Minister of Economy and Finance Pier Carlo Padoan said on Friday night the government would put up around 10 billion euros of state cash to rescue the stricken Banca Popolare di Vicenza and Veneto Banca.

After Brussels last week firmly placed the liquidation ball in Rome's court, Padoan's ministry said late Friday that the government would put up state cash to rescue the stricken Banca Popolare di Vicenza and Veneto Banca.

Both face bankruptcy and European authorities had urged Italy to devise a rescue framework, selling off their good assets and transferring toxic assets to a "bad bank," essentially financed by Rome.

The logo of Banca Popolare di Vicenza in Rome, Italy, on Friday, Dec. 23, 2016.

The Italian government will stage the rescue with support from the country's biggest retail bank, Intesa Sanpaolo.

Padoan said 4,785 billion euros would be set aside immediately to "maintain capitalization" of Intesa Sanpaolo, which has made that a condition of any cooperation.

For its part Intesa has put one symbolic euro on the table and attached a further string to the deal by insisting its share dividend policy remain unaffected.

The logo of Veneto Banca bank in Venice, Italy January 31, 2016.

Rome will provide a further "guarantee" of 400 million euros, Padoan said, with the remaining cash going to cover a huge hole due to bad loans.

"This decree allows the stabilization of the Venetian economy and safeguarding of the economic activity of the Venetian banks," said Padoan.

(CGTN)