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Veneto banks' senior bonds hurt by "bail in" worries after Wednesday meeting
May 25, 2017 / 8:10 AM / 7 months ago

Veneto banks' senior bonds hurt by "bail in" worries after Wednesday meeting

MILAN, May 25 (Reuters) - Senior bonds issued by Italian bailout candidates Popolare di Vicenza and Veneto Banca fell sharply at open on Thursday after sources said EU authorities have not budged from their demand that private investors contribute 1 billion euros to the rescue.

The two regional banks must fill a combined 6.4 billion euro capital shortfall and they have asked to tap state aid under EU rules that allow a government to support an ailing bank only to help it withstand a potential adverse scenario.

Sources said on Wednesday the EU Commission had turned down an Italian request to lower the 1 billion euro private capital injection demanded to authorise the state bailout.

So far only junior bondholders stand to take a loss in the rescue. Hitting also senior bondholders would be a way to raise private capital to fill the shortfall.

A Milan-based trader said a Popolare di Vicenza October 2018 bond fell as much as 3.5 percentage points at open to yield 28.88 percent. Also a Popolare di Vicenza March 2020 bond and a Veneto Banca May 2019 senior bond fell sharply.

Reporting by Valentina Za

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