Monte dei Paschi di Siena's crisis

Banca Monte dei Paschi di Siena, founded in 1472 and often described as the world's oldest bank still operating, had accumulated one of the largest piles of non-performing loans in Italy's banking system following the country's prolonged post-2008 slump, compounded by a series of ill-timed acquisitions made just before the financial crisis. The bank's troubles deepened in 2013 when it emerged that previous management had used complex derivatives transactions to conceal losses from regulators and investors for years, a scandal that led to criminal charges against former executives. Repeated attempts to raise private capital and sell off bad loans fell short as Monte dei Paschi's problems became one of the clearest test cases of the eurozone's post-crisis bank-resolution rules, which were designed to limit taxpayer bailouts. When a planned private recapitalization failed in December 2016, the Italian government stepped in with a precautionary state rescue worth roughly €5.4 billion, taking a majority stake in the bank while imposing losses on some junior bondholders under the new EU framework — one of the first major tests of those post-crisis rules in practice.