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ECB Takes Over Italy's 10th Largest Bank as Italy Skids Towards Recession

• moneymaven.io by Mike Mish Shedlock

The European Central Bank has announced the appointment of temporary administrators and a "surveillance committee" at troubled Italian lender Banca Carige, as new data indicated the country is flirting with recession. The ECB intervention follows a failure in December by the middle-weight Genoan bank to achieve shareholder support for a €400m (£360m) bond issue.

Italian banks are still exposed to a high proportion of bad loans on their balance sheets following the financial crisis. They are also closely tied to the course of national politics in the country as they are large holders of sovereign debt, risking a so-called 'doom loop' effect.

It comes as fresh survey data from IHS Markit pointed towards a slowdown in the manufacturing sector across the currency bloc. On a national basis, Italy scored 49.2, just below the 50 mark that indicates growth. This added "to the evidence that the economy was either in or close to recession" in the second half of 2018, according to Claus Vistesen of Pantheon Macroeconomics.

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