Italian banks are estimated to hold around £270billion of bad loans – more than 30 per cent of the eurozone’s total – which experts worry could spark another financial crisis for the country. Backed by the government, financial institutions have now agreed to a £4billion package aimed at helping the Italy’s most troubled banks. The cash is to be used to buy the high risk loans, as well as injecting money into firms where there are worying shortfalls.
Panic over the bad loans started gathering pace at the start of the year, as investors dumped banking stocks. During this time, Italy’s top stock market dropped by as much as 20 per cent over concern another crisis was brewing, which would have a huge imact on the eurozone. But investors reacted with relief over the news of the rescue package, with shares rising in the Italian banking sector. READ MORE