Europe: The $12 billion standoff

Author: | Published: 21 Mar 2016

After Italy's long-awaited plan for resolving its chronic non-performing loan (NPL) problem was made public in January, the too-big-to-fail debate has firmly regained its place in the spotlight – if it ever went away in the first place.

The Italian government decided – and the European Commission agreed – that it would offer state guarantees for the securitisation of the NPL portfolios, much to the horror of many commentators, who believed it amounted to state aid.

It set a dangerous precedent, many said, with it being the first test of Europe's new Bank Recovery and Resolution Directive (BRRD), implemented on...