Document Type

Case Study

Case Series

Broad-based Capital Injections

JEL Codes

G01, G28


In response to the 2007–09 Global Financial Crisis, in October 2008, the Italian government announced urgent measures to guarantee financial stability and the flow of credit. The Italian government targeted three areas of support: (1) bank recapitalizations, (2) liquidity access, and (3) expansion of guarantees on bank deposits. This case study exclusively examines the Italian bank recapitalization scheme introduced in December 2008 in line with European Union State Aid rules.

The four Italian banks recapitalized in 2009 under the scheme were Banco Popolare (€1.45 billion), Banca Popolare di Milano (€500 million), Credito Valtellinese (€200 million), and Banca Montepaschi di Siena (€1.9 billion), for an overall amount of €4.05 billion. The government purchased special bonds issued by banks. These bonds became known as “Tremonti bonds,” and Italian regulators agreed to treat them as core Tier 1 regulatory capital.

Date Revised