Italy passes bank reforms, but shares drop further

MILAN – Italian bank shares continue to slide despite the Cabinet’s approval of a batch of long-awaited banking reforms.

Bank shares were broadly down Thursday, as the Milan Stock Exchange’s benchmark index fell 5 per cent, the worst performer in Europe. Market leaders UniCredit and Intesa SanPaolo shed 8.8 per cent and 6.7 per cent.

That comes after the government late Wednesday approved measures agreed with the European Union to bundle bad loans that have worried investors this year.

The measures facilitate the transfer of 70 billion euros ($79 billion) worth of impaired loans off banks books to help heal the sector. The government also approved the creation of a holding company with at least 1 billion euros in share capital to consolidate the co-operative banking sector, which comprises some 350 banks.