FRANKFURT Dec 26 European Central Bank
policymaker Jens Weidmann said plans for a state bailout of
Italian bank Monte dei Paschi di Siena should be
weighed carefully as many questions remain to be answered,
according to German newspaper Bild.
"For the measures planned by the Italian government the bank
has to be financially healthy at its core. The money cannot be
used to cover losses that are already expected," Bild quoted
Weidmann as saying in a summary of an article due to be
published on Tuesday.
He said there must be a risk of severe economic turbulence,
adding: "All this must be carefully examined."
The Italian government approved a decree on Friday to bail
out Monte dei Paschi after the world's oldest bank failed to win
investor backing for a desperately needed capital increase.
Monte dei Paschi emerged as the weakest of some 51 European
banks subjected to stress tests earlier this year by the ECB. It
was given until the end of the year to sort out its problems or
face being wound down.
Since the 2007-09 financial crisis, the European Union has
adopted rules that make state aid a last resort when it comes to
helping troubled banks.
"These (rules) are meant especially to protect taxpayers and
put responsibility on investors. State funds are only intended
as a last resort, and that is why the bar is set high,"
Weidmann, the hawkish president of Germany's Bundesbank, told
(Reporting by Maria Sheahan; editing by David Clarke)