UniCredit CEO calls for 20 bln euro recovery fund

LONDON, July 11 (BestGrowthStock) – A privately financed European
recovery fund that would be used to bail out failed banks could
raise up to 20 billion euros ($25.36 billion) of capital over a
few years, the head of Italy’s biggest bank said.

“It would not be a resolution fund. It would provide
specific guarantees to support ailing banks to issue secured
notes,” UniCredit SpA (CRDI.MI: ) Chief Executive Alessandro
Profumo wrote in the Financial Times’ Monday edition.

In the article titled “Europe’s banks need a recovery
fund,” Profumo said the fund would be created using voluntary
contributions from top European banks and would not require
funding from European authorities or member states.

“The option for authorities to use the fund to stabilise
one or a few large, ailing banks can assure the market that the
crisis can be contained at an early stage,” he wrote.

“The fund would be one of the three necessary elements to
avoid intervention in the next financial crisis: a supervisory
and regulatory system that prevents, as much as possible, the
causes of systemic crises.”

He said the fund would act as “an effective system of
crisis management” used to avoid contagion.

The European Union is in the process of drafting plans for
a network of national bank resolution funds, based on a bank
tax, which would pay for the winding up of ailing banks so that
taxpayers don’t foot the bill in the future.

Profumo said last month that a European Union-backed tax on
bank to help pay for the financial crisis was “deeply
mistaken.” For details, see [ID:nLDE65H0U4]
($1=.7885 Euro)
(Reporting by Karolina Tagaris; editing by Jeffrey Benkoe)
([email protected]; +44 20 7542 2580)

UniCredit CEO calls for 20 bln euro recovery fund