Italy reached a preliminary agreement with the European Commission to establish a fund to compensate customers affected in 2015 by the state’s action of saving four small banks. Italian Prime Minister, Matteo Renzi, was under intense pressure to compensate the approximately 12,500 investors whose savings got evaporated when the government rescued four banks in accordance with EU regulations. The EU regulations provide that losses are borne first by shareholders and bondholders. However, Renzi did not specify in what amount to which the customers would be compensated, saying several times that the compensation budget proposal would be presented soon.
Therefore, the fund comes as a consequence of Italian Prime Minister Matteo Renzi’s efforts to reboot the economy since the fund’s main aim is to help weaker banks and their clients. The Atlante fund will be made up by private money, reportedly worth €5 billion ($5.7 billion; £4bn), and will buy up shares and bad debt in struggling banks. All banks in Italy have contributed a total of 100 million to the fund to protect savings, but the amount will be insufficient to cover all losses, and the government could ask for more from other financial institutions.