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maltatoday, WEDNESDAY, 3 AUGUST 2016 11 Business Today www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way Renzi insists Italian banks are 'good' despite Monte dei Paschi rescue Italian prime minister Matteo Renzi vowed to try and prevent the Italian fi nancial system from falling off a cliff, and argued that the problem of non-per- forming loans within the coun- try's third largest lender, Monte dei Paschi di Siena, is now over. Speaking yesterday, the beleaguered Renzi said that a last-minute rescue package for the bank on Friday has "cut off the problem". Speaking to CNBC he said "my view is that Italian banks are good". "There are some problems, yes. The first is Monte dei Paschi, we know. But Monte dei Paschi is also a great brand, oldest bank in Europe… now, without NPLs (non-performing loans) and with a clear strategy, I think this bank could be a very good bank for the future." Renzi said that Friday's rescue package — led by a consortium of banks, including Deutsche Bank, JP Morgan, Goldman Sachs, Citi, Santander, and Credit Suisse, which included a €5 billion recapitalisation plan for the world's oldest bank – had helped to solve one of the biggest problems facing the Italian financial system, and that he would now focus on ensuring growth for Italy's banks. "I think the best way to solve the problem of NPL is the growth. And this is my priority, my dream and my nightmare, every day I think about it. Growth, growth, growth," Renzi said. Monte dei Paschi di Siena is the world's oldest bank and currently the third largest in Italy. It is struggling under a massive pile of bad debts. As expected, it fared poorly in the latest round of the European Banking Authority's (EBA) stress tests, the results of which were revealed on Friday. The sector was once again front and centre for investors yesterday morning. Shares of the bank were down 7% and Unicredit tanked and was briefly suspended from trade over concerns about its bad loan portfolio. Renzi also said that he will not enforce any EU-mandated plans to follow through with bail-in laws, and that any such rules would be a "disaster" for the Italian economy. Speaking in English, Renzi said "Italy is totally fighting for avoid bail-in because also soft bail in could be a disaster for the credibility and for the confidence." Renzi also talked about what Britain's vote to leave the EU would mean for the rest of the continent, calling it an "incredible wake-up". "There are (will be) a lot of problems around Europe, if Europe doesn't consider Brexit an incredible wake-up. "I think the priority is to really change the relation between Europe and citizens. If we don't change, the risk will be Europe becomes responsible (in the eyes of citizens) for every problem in this continent," he added. Renzi also reiterated his belief that he and his Democratic Party will win October's referendum on constitutional reforms, although he warned that a period of instability could follow regardless of the result. "I will win. But I think people need to understand what instability will follow. Not just the fact that you're still going to have this quick turnover of governments if you don't manage this reform. But also, there's a risk if you look at the polls, that we're in a situation where perhaps the Five Star Movement are allowed to lead this country. The people need to understand what voting no here means – we learnt that in the UK." Italy's oldest bank clinched a multi-billion dollar rescue after fl unking a test of its fi nancial strength Japan ministers approve €245 billion stimulus package Japanese Prime Minister Shinzo Abe's cabinet approved a 28 tril- lion yen (€245 billion) govern- ment stimulus package on Tues- day, in the latest effort to jolt the nation's sluggish economy. The government will allocate money to infrastructure projects such as upgrading ports to accommodate foreign cruise ships and building food-processing facilities to increase exports of farm products. A supplementary budget to be prepared later this month will provide direct spending of about 4 trillion yen in the fiscal year ending in March. The package also aims to offer more help to Japanese who say they haven't felt many benefits from more than three years of Abenomics, Abe's growth program. The government will provide cash handouts of 15,000 yen (€132) each to 22 million low- income people, bring more people into a public-pension system by easing admission criteria based on premium payments and offer more college scholarships. The government expects the measures to boost gross domestic product by 1.3%, but economists have expressed disappointment. "This package is very much in line with reports over the past few days and has not done much to improve sentiment," said Lee Jin- Yang, macro research analyst at Aberdeen Asset Management. The programme includes spending on infrastructure projects and the reconstruction of disaster zones, including parts of north-eastern Japan which were devastated by an earthquake and tsunami in 2011. Part of the funds will also be used to improve wages for child and elder care workers, and provide support for small-scale companies and low income families. However, Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo, said the stimulus would "have a very short-term effect". "In terms of contents of the stimulus, old-fashioned public works tend to dominate. Overall, the stimulus packages smack of another disappointing misfiring of Abenomics," he added. The latest government stimulus comes just days after the Bank of Japan eased monetary policy slightly and announced a plan to review its monetary stimulus programme in September. That raised expectations for so-called "helicopter money", printing money to pay for government debt. Japanese Prime Minister Shinzo Abe's government will give cash handouts of €132 to 22 million low-income earners