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Bail In Risk â â¬4 Trillion Banking System In Italy Poses Contagion Risk as Referendum Looms

Bail in risk â â¬4 Trillion Italian banking system at risk as referendum looms Sunday according to Financial Times

ConcernsÂ of multiple bank failuresÂ â Eight banks at risk of failure and bail ins

Monte dei Paschi di Siena, third largest by assets and mid-sized banks Popolare di Vicenza, Veneto Banca and Carige and four smaller banks

Italy’s banks have â¬360 billion of problem loans

Contagion poses risks toÂ Unicredit, Italy’s largest bank by assets andÂ only globally significant financial institution

Bail in risks highlight importance of deposit diversification and gold

Imprudent to have all ‘savings eggs’ in ‘bankers basket’

(Copyright The Financial Times Limited 2016)

âUp to eight of Italy’s troubled banks risk failing if prime minister Matteo Renzi loses a constitutional referendum next weekend and ensuing market turbulence deters investors from recapitalising them, officials and senior bankers say.

Mr Renzi, who says he will quit if he loses the referendum, had championed a market solution to solve the problems of Italy’s â¬4 trillion banking system and avoid a vote-losing âresolutionâ of Italian banks under new EU rules.â

Financial Times

The Italian banking system looks vulnerable to collapse whether the referendum is passed in Italy or not. Were the referendum passed, it may allow senior Italian and international bankers to further ‘kick the can down the road’ and delay the inevitable.

Financial and economic contagion in the EU is the likely outcome of the financial and political mess that both Italy and other EU states find themselves in. The question is increasingly not if, but when.

Bail-ins are ânow the ruleâÂ and depositors need to begin preparing byÂ diversifying and not have all their ‘saving eggs’ in the ‘bankers basket’.

An important way to protect investments and savings is to be diversified and have a healthy allocation to physical gold â both in one’s possession and in secure storage, in the safest vaults in the world.

Read full Financial Times article on Irish Times here

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