By Giuseppe Fonte
ROME (Reuters) – Italy’s cabinet was expected to meet on Sunday evening to approve a decree that would provide a 1 billion euro ($1.1 billion) lifeline to cooperative lender Banca Popolare di Bari, two sources with knowledge of the matter said.
The bank, which said last week it needed an urgent injection of up to 1 billion euros, has struggled to cope with mounting loan losses during a slump that has devastated Italy’s economy, notably in Popolare di Bari’s home region in the south.
It was placed under special administration by the Bank of Italy on Friday but the government led by Prime Minister Giuseppe Conte failed to approve a rescue package as several ministers boycotted a hastily convened cabinet meeting.
Conte will make a fresh attempt at pushing through an emergency decree to bail out the bank on Sunday evening, with a cabinet meeting due to be held at 2000 GMT, the sources said.
One of the sources, who has seen a draft of the decree, said the plan called for the injection of 1 billion euros into state-owned Banca del Mezzogiorno-Mediocredito Centrale. Of these funds, 500 million would be used to recapitalize Popolare di Bari and the rest would be set aside in case of future requirements.
The government wants a deposit guarantee fund financed by Italian banks to take part in the rescue by providing as much as 500 million euros.
The Interbank Deposit…