MPS stares down the barrel of a bail-in

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MPS stares down the barrel of a bail-in

MontePaschiSiena 230x150
A view of a "Monte Dei Paschi di Siena" bank branch in Milan, Italy, Sunday, Oct.26, 2014. The European Central Bank says 13 of Europe's 130 biggest banks have flunked an in-depth review of their finances and need an extra 10 billion euros ($12.5 billion) to cushion themselves against any future crises. ECB officials said Sunday the test had been tougher than similar reviews in 2011 and 2010, which gave a pass to banks that later needed bailouts. (AP Photo/Luca Bruno) | Luca Bruno/AP/Press Association Images

Banca Monte dei Paschi di Siena (MPS) was unmistakably clear when spelling out the terms of a debt-for-equity swap this week: if bondholders don’t volunteer to be bailed in, the bank will be placed in resolution and they will have no choice. But creditors are not the only ones who are worried as the world’s oldest lender teeters on the brink — the whole Italian banking system is holding its breath.

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