|07 April, 2020

Italy's liquidity and anti-takeover scheme to soften coronavirus hit

Italy approved an emergency decree on Monday

The Arch of Constantine is seen in Rome as Italians stay home as part of a lockdown against the spread of coronavirus disease (COVID-19) in Rome, Italy March 22, 2020.

The Arch of Constantine is seen in Rome as Italians stay home as part of a lockdown against the spread of coronavirus disease (COVID-19) in Rome, Italy March 22, 2020.

REUTERS/Alberto Lingria

ROME- Italy approved an emergency decree on Monday that offers guarantees on more than 400 billion euros ($435.44 billion) of possible bank loans to companies hit by the coronavirus crisis. 

Prime Minister Giuseppe Conte said the legislation, combined with a previous stimulus package unveiled in March, would allow banks to offer credit totalling more than 750 billion euros to try to stave off the collapse of the euro zone's third largest economy.

The decree also extends Rome's special powers to shield key industries from unwanted foreign interest, including European groups.

Following are some of the key measures:

MEASURES TO INCREASE LIQUIDITY AND BANK LOANS

* The Treasury, via state lender Cassa depositi e prestiti (CDP) and its dedicated export agency Sace, will shield banks from losses on up to 90% of loans to companies, hoping to inject up to 200 billion euros into the economy.

Companies using the scheme, which must be authorised by the European Commission before it becomes effective, must not pay dividends for a year.

* The decree also introduces a co-insurance scheme run by the Treasury and Sace which is expected to provide guarantees for an additional 200 billion euros of loans to exporters.

* Rome also plans to strengthen an existing state-backed fund that helps small- and medium-sized companies to borrow more cheaply from domestic lenders.

The fund will offer a direct 100% guarantee for loans not exceeding 25,000 euros. Under a co-insurance scheme granted by Sace and other insurers, this could be extended to loans of up to 800,000 euros.

* Economy Minister Roberto Gualtieri said the overall liquidity package required the Treasury to allocate around 30 billion euros on top of a previous 25 billion set aside last month.

ANTI-TAKEOVER PROVISIONS

* The decree also allows Rome to veto hostile takeovers in numerous sectors including finance, credit, insurance, energy, transport, water, health, food safety, robotics, artificial intelligence, semiconductors and cybersecurity.

* It also allows the government to temporarily block until the end of 2020 attempts by EU players to acquire a controlling stake in any company deemed strategically important.

* Rome can veto non-EU companies from acquiring a stake exceeding 10% of capital in strategically important firms.

* Market watchdog CONSOB will be able to force investors to disclose their plans when they acquire a stake of 5% or higher in listed companies with a broad shareholder base.

($1 = 0.9186 euros)

(Reporting by Giuseppe Fonte, editing by Gavin Jones and Ken Ferris) ((giuseppe.fonte@thomsonreuters.com; +390685224393;))

More From Global