Rome Gives Italy Banks, ETF a Helping Hand

The Italian government and top lenders could come up with a plan for a state-backed fund to mend Italy’s financial sector, bolstering bank shares and country-specific exchange traded funds on Monday.

The iShares MSCI Italy Capped ETF (NYSEArca: EWI) rose 1.9% Monday and popped back above its short-term, 50-day simple moving average.

The FTSE Italia All-Shares Bank Index closed 2.8% higher Monday for a 10.5% gain since Thursday’s close. The financial sector rallied on bets that of a bailout announcement soon.

Shares of Italian banks have lost about a third of tier value since the start of the year on concerns over a precarious financial system. EWI has declined 14.4% year-to-date.

EWI includes a hefty 33.1% tilt toward the financial sector, including Intesa Sanpaolo 12.0%, Unicredit 5.8% and Assicurazioni Generali 4.7% among its top holdings.

Economy Minister Pier Carlo Padoan called a meeting in Rome with executives from Italy’s top financial institutions on Monday to hash out a plan for a state-backed fund to acquire bad loans and cover capital shortfalls, reports Silvia Aloisi for Reuters.

“This is the right week,” Prime Minister Matteo Renzi told reporters when asked about the plan’s timing.