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8 months ago
New Italian PM wins first confidence vote, pledges to support banks
December 13, 2016 / 7:15 PM / 8 months ago

New Italian PM wins first confidence vote, pledges to support banks

Newly appointed Italian Prime Minister Paolo Gentiloni (2nd L) is congratulated by his ministers at the end of a speech before a confidence vote at the parliament in Rome, Italy, December 13, 2016.Alessandro Bianchi

ROME (Reuters) - Italian Prime Minister Paolo Gentiloni won an initial vote of confidence in the lower house of parliament on Tuesday after laying out a limited programme for his new government, which might only survive a few months.

Gentiloni has taken over from former premier Matteo Renzi, who resigned last week after Italians rejected his proposed reform of the constitution in a referendum.

Making his maiden speech to parliament in his new role, the softly spoken Gentiloni said he was prepared to support Italy's ailing banks and demanded more help from the European Union in coping with an influx of migrants.

"I want to say very clearly that the government ... is ready to intervene in order to guarantee the stability of banks and the savings of our citizens," he told the Chamber of Deputies, a day after being sworn in by President Sergio Mattarella.

To take office, he needs to win votes of confidence in both houses of parliament and easily won the first in the lower chamber by 368 to 105.

Many opposition lawmakers did not take part in the ballot, in protest at the fact that Gentiloni had re-appointed almost all the ministers who served under Renzi.

Gentiloni faces a more difficult vote in the upper house Senate on Wednesday, where his majority is likely to be much smaller following a decision by a former Renzi ally not to support the new administration.

He is widely expected to scrape through, but his limited support underscores the low expectations for this government, with many politicians predicting national elections in the first half of 2017, a year ahead of schedule.

Newly appointed Italian Prime Minister Paolo Gentiloni (L) talks with Defence Minister Roberta Pinotti before a confidence vote at the parliament in Rome, Italy, December 13, 2016.Alessandro Bianchi

BAD LOANS

His fragile support also means his administration has limited ambitions and is likely to spend its first weeks trying to defuse a long-running crisis in the banking sector.

Monte dei Paschi di Siena (BMPS.MI), Italy's third-biggest lender, is pressing on with efforts to tap the market for 5 billion euros ($5.3 billion) of fresh cash that it needs to stay afloat. However, its chances of success appear slim and the state is likely to have to step in, bankers say.

Slideshow (2 Images)

A failure of the world's oldest bank would threaten the savings of thousands of Italians and could have repercussions for Italy's wider banking sector, which is saddled with 360 billion euros of bad loans - a third of the euro zone's total.

In Tuesday's speech Gentiloni said he would continue Renzi's battles with the EU, pushing for flexible fiscal rules and more cooperation in sharing out the thousands of migrants who land on Italy's shores from Africa and the Middle East.

Pledging "a very clear position" at an EU summit in Brussels on Thursday, he said it was "not acceptable" that the EU is "too severe on some aspects of austerity and too tolerant with countries that don't show common responsibility on immigration".

Foreign minister in the previous government, Gentiloni has defended his decision to bring most of his old colleagues with him in the new cabinet, including Renzi's two closest allies - Maria Elena Boschi and Luca Lotti - saying he had to act quickly to prevent instability.

The main opposition parties, the anti-establishment 5-Star Movement and the right-wing Northern League, have both promised street demonstrations in the coming weeks to denounce the new executive, which they have dismissed as a "photocopy".

"They are digging their grave with their own hands," said Luigi Di Maio, a 5-Star deputy widely expected to be the party's candidate for prime minister at the next election.

Additional reporting by Philip Pullella; editing by Andrew Roche

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