[MILAN] New European rules for dealing with bank crises are having a negative impact on the sector and not just in Italy, the director general of the Bank of Italy said on Wednesday.
The new rules, which have been gradually introduced over the past few years, state that investors in an ailing bank - including retail bondholders and depositors with more of 100,000 euros - must be hit before any taxpayer money can be used to prop up the lender.
Salvatore Rossi, in comments e-mailed to Reuters, said that while it was right in principle to shield taxpayers, hitting retail investors in bank "undermines confidence in the system and ultimately the financial stability of the country and of the whole eurozone."
He said the combined impact of the new rules, and the European Commission's stance on state aid for struggling banks, was "overall negative, and not just in Italy."
Italy, where tens of thousands of ordinary citizens have invested their savings in banks' shares and bonds, is a vocal critic of the new rules, which came into full force this year.