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Gadhafi Bails Out Italy's Largest Bank

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No, really, I didn't belive it either.

We all hear about how things are going pretty bad in Europe, but this one about takes the cake.

Around a month ago, Unicredit (the largest bank in Italy) floated the idea to raise capital by having a 50% common stock issuance, totaling EU7.5 billion. As the European Banking Authority (EBA) later followed up on in stress tests, it was likely that Unicredit would need more capital than what would be raised from the common issuance.

However, today the Italian government and by extension Unicredit went a different route. Last spring Italy froze many of the overseas assets of Gadhafi and the Libyan government and today the Italian Treasury released these funds, totalling EU375 million so that the Libyan Central Bank then used to purchase Unicredit common stock. Directly after the funds were released, the Unicredit board approved the new stock issuance and the coinciding capital increase that would put them nearly in line with the new EBA standards. If you think for one second that these two actions are not a coincidence, think again.

I guess it shows how bad things really are in Europe, when you have to raise capital from a dead dictator.
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