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This week Italy managed a bank run; next week?

A “run” on Italy’s third largest bank begun on Wednesday; by Thursday, the Prime Minister and the European Central Bank were trying to restore trust, in the bank, and the system at large, with some success.

Prime Minister Renzi said the country has a robust banking system and the Milan Stock Exchange woke up to a 6,9% rise across the sector.

On Wednesday, depositors withdrew their money from Banka Monte dei Paschi di Siena SpA (BMPS), generating images that resembled Greece in the summer of 2015.  CEO Fabrizio Viola described the outflow as “limited.” On Thursday, the outflow had eased. Finance Minister, Pier Carlo Padoan, stepped in to suggest the bank still had “strong fundamentals and large liquidity,” easing the market before Renzi took over to calm the general public.

BMPS shares have been plunging; on Wednesday alone, the bank shed 22% of its value, when trading was suspended. This was a culmination of a trend that has seen the bank losing 46% of its stock value since Monday. Since 2013, BMPS has been entangled in a legal scandal involving loss-making financial transactions. The bank is capitalised at roughly €1.6 bn, although investors have poured in €8 bn over that last two years. That made BMPS particularly vulnerable to bad news.

A rumour that the European Central Bank was asking three banks BMPS, Banco Popolare and UniCredit for data triggered the panic. And there was a reason to panic as bail-ins hit four small regional Italian banks in December.

The sector as a whole has been affected and has lost 24% since January. There are reasons to fear a systemic rather than “a bank” problem. Non-performing loans reached €201 bn, the Italian Banking Association announced in November 2015. A three-year recession undermines confidence in the economy and the sector as a whole. However, Fitch moved the Italian banking sector onto a “stable” outlook, up from “negative” in 2015, suggesting that the rate of non-performing loan formation is slowing.

Italy has 700 banks. If “consolidation” of the kind that took place in Greece were to take place, the impact on the financial sector would be of European, not national proportions. The government has put forward the idea of a bad bank, but the plan has yet to be approved by the European Central Bank. Nonetheless, the Prime Minister and Fitch have been telling investors not to worry.

The woes of the banking sector have not undermined Italy as a sovereign debtor, with the country borrowing at 1.56%, having reached as high 7.5% in November 2011. For the moment, what the government says still matters. Panic can be stopped. And that is a big difference from the Greek situation, for the moment.