Economy minister gives reassurance on Italian banking system

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MILAN, March 20 (Reuters) – Italy’s economy minister said on Monday he was surprised by the decision to give priority to Credit Suisse shareholders over bondholders in its rescue merger with UBS .

Economy Minister Giancarlo Giorgetti said however that the impact of the Credit Suisse crisis on the Italian banking system was “insignificant” and that the situation in Europe appeared to be under control.

“I repeat and we believe that the repercussions on the Italian banking system are insignificant,” said Giorgetti, adding that decisions by central banks to raise interest rates must be “calibrated” to avoid creating problems in terms of financial stability.

“It seems to me that the markets have calmed down a bit now, I think the situation in Europe is under control”, he added, speaking on the sidelines of an event in Milan.

Some of the world’s largest central banks came together on Sunday to try to stop a banking crisis from spreading as Swiss authorities persuaded UBS Group to buy rival Credit Suisse for $3.23 billion and assume up to $5.4 billion in losses in a historic deal.

The Swiss regulator, said the decision to write down to zero the Additional Tier 1 bonds, which can be converted into equity or written off if a bank’s capital level falls below a certain threshold, would bolster the bank’s capital.

($1 = 0.9289 Swiss francs)

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