World's Eighth-Largest Economy'As Italy considers options to recapitalize its banks, the Texas ratio, a measure of bad loans as a proportion of capital reserves, illustrates the scale of the problem. A figure above 100 percent is a warning signal the banks need a solution quickly . . . '
https://www.bloomberg.com/news/articles/2016-07-06/italian-banks-rank-among-worst-in-europe-by-texas-ratio-chartAnd gotta say, Looney Zero Hedge or not, this is succinct:
' . . . before public funds are injected into a bank, shareholders and creditors must be bailed in for a minimum amount of 8% of total liabilities, as famously happened in the rescue of Cyprus’ banking system in 2013.
The Italian government knows that this approach could end up wiping out retail investors (otherwise known as voters) who were missold, in many cases fraudulently, subordinated bonds by cash-hungry banks in the wake of the last crisis, in turn wiping out the government’s votes. To avoid such an outcome, the government has proposed compensating those retail bondholders with public funds, just as the Spanish government did with the holders of preferente bonds. Which, of course, is in direct contravention of EU laws.
So far, the European Commission has stayed silent on the issue, presumably in the hope that the resolution of Italy’s financial sector can be held off until at least after the French elections in late April, if not the German elections in September.'
http://www.zerohedge.com/news/2017-03-30/here%E2%80%99s-why-italy%E2%80%99s-banking-crisis-has-gone-radar
