Italy's government is bailing out two banks in the Venice region at a cost of 5.2bn euros (£4.6bn; $5.8bn). The move comes two days after the European Central Bank warned that Banca Popolare di Vicenza and Veneto Banca were failing or likely to fail. The banks' "good" assets will be taken on by Intesa Sanpaolo banking group. Italian Prime Minister Paolo Gentiloni said the rescue was needed to protect savers and ensure "the good health of our banking system". The two banks' branches and employees will be part of Intesa by Monday morning in a move designed to avoid a potential run on deposits that could have spread to other Italian banks.

Economy Minister Pier Carlo Padoan said Rome would also offer guarantees of up to 12bn euros for potential losses to Intesa from bad and risky loans. "Those who criticise us should say what a better alternative would have been. I can't see it," he told a press conference on Sunday. Rome's plan has been approved by the European Commission and avoids a bailout under potentially tougher European rules.

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