UniCredit chief proposes €20bn private sector bailout fund

12 July 2010

The chief executive of UniCredit has proposed the introduction of a new private sector bailout fund.

Alessandro Profumo told the Financial Times that the so-called European Recovery Fund could raise as much as €20 billion ($25 billion) in capital over the course of the next few years.

The UniCredit executive explained that the fund would provide struggling banks with specific guarantees to issue secured notes.

"The option for authorities to use the fund to stabilize one or a few large, ailing banks can assure the market that the crisis can be contained at an early stage and avoid a systemic event from occurring," Mr Profumo asserted.

Last month, Michel Barnier, internal market commissioner for the EU, said countries in the region are set to persist with plans to introduce a banking levy, despite the failure of G20 nations to agree on a global tax.

The money would be used to help fund any future bailouts required in the financial sector.

By Claire Archer

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