The proposed fund could include up to €5 billion in equity from lenders and investors in Italy, along with debt, and would try to buy shares of distressed banks. Additionally, a secondary vehicle could acquire non-performing loans.
The Italian government has been under pressure to calm concerns over its ailing banking system, which underperformed in the European Central Bank’s 2014 financial stress test and is holding €360 billion, or $410.5 billion, in bad loans.
The European financial sector ETF, iShares MSCI Europe Financials ETF (NYSEArca: EUFN), which tracks European financial companies, also gained 1.3% and was trading around its 50-day trend line on Monday. EUFN includes a 5.5% tilt toward Italy.
Meanwhile, the broader Vanguard FTSE Europe ETF (NYSEArca: VGK), which has a 3.8% tilt toward Italy and 18.8% in financials, was up 0.5% Monday.
iShares MSCI Italy Capped ETF