BMPS Banca Monte Dei Paschi Di Siena Spa

By Giada Zampano 

ROME--Italy's new Prime Minister Paolo Gentiloni highlighted Italy's banking problems and the country's struggle to control migration as his government's priorities in his first speech before parliament, marking out a narrow platform that tacitly acknowledges the fragile political support he enjoys.

The new prime minister, who took power just a week after the resignation of his predecessor Matteo Renzi, needs to win votes of confidence in each of Italy's two legislative chambers. The first is expected to come Tuesday evening, while Italy's Senate is due to hold its confidence vote on Wednesday.

In a speech laying out his governmental program before Italy's lower house, Mr. Gentiloni said he stands ready to help support Italy's banking system, which is saddled with about EUR200 billion ($212.4 billion) in bad loans. While he didn't specifically cite Banca Monte dei Paschi di Siena SpA, he said state aid may be required in "specific cases." Bankers expect that the state may have to step in and rescue Italy's No. 3 lender, possibly as soon as next week.

Mr. Gentiloni also pledged on Tuesday to take a strong stand in the European debate over migration, as the European Union looks at revising asylum rules. Mr. Gentiloni is scheduled to participate in an EU summit this Thursday where leaders will discuss the issue.

Italy is at the front lines of Europe's migration problem. More than 170,000 migrants have arrived by boat so far this year. Mr. Gentiloni echoed the push by his predecessor Matteo Renzi in calling Tuesday for other European countries to share the burden.

"It is unacceptable that Europe is so severe in its [economic] austerity policies and so tolerant of those countries that don't share the burden" of coping with the new arrivals, he told parliamentarians.

Mr. Gentiloni confirmed that his government will, like his predecessor's, push for pro-growth policies in Europe to support Italy's feeble economic recovery. Italy has been vociferous in calling for a relaxation in the fiscal restraints imposed by the EU. The country's economy is at a near standstill, expected to grow no more than 1% next year and in 2018.

The timidity of Mr. Gentiloni's platform reflects how little political capital the new premier enjoys. Critics, led by the antiestablishment 5 Star Movement, have blasted the new government as a "photocopy" of Mr. Renzi's, given that Mr. Gentiloni's cabinet is little changed from that of his predecessor.

The premier addressed a half-empty lower house, with most of the opposition parties, including the 5 Star Movement, deserting the chamber.

Mr. Gentiloni isn't expected to encounter problems in securing the vote in the lower house, where his party, the center-left Democratic Party, enjoys a wide majority. He faces a tougher task in the Senate, where his majority is much narrower. A small center-right party that had supported Mr. Renzi said Monday that it wouldn't vote for Mr. Gentiloni's government.

While most political experts expect Mr. Gentiloni to secure the Senate vote, they say it will make it difficult for the government to act boldly in addressing Italy's manifold problems.

To survive future confidence votes on important issues, the Gentiloni government may have to secure the external support of other small parliamentary groups, leaving him reliant on shaky majorities.

Write to Giada Zampano at giada.zampano@wsj.com

(END) Dow Jones Newswires

December 13, 2016 10:14 ET (15:14 GMT)

Banca Monte Dei Paschi D... (BIT:BMPS)
Historical Stock Chart
From May 2024 to Jun 2024

Banca Monte Dei Paschi D... (BIT:BMPS)
Historical Stock Chart
From Jun 2023 to Jun 2024