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• The euro-crisis: crying all the way into history’s bank.

By DAVID ENRICH and DEBORAH BALL [Wall Street Journal] – The world’s oldest bank, Siena-based Banca Monte dei Paschi di Siena SpA, is now caught in the storm. European leaders are expected to force Monte dei Paschi to raise €2 billion, or about $2.8 billion, or more in new capital, analysts say. The bank’s troubles are reverberating through the region: The powerful foundation that owns half the bank is drastically cutting back charitable donations, retreating from its role as a modern-day Medici.

“We can’t be the city’s ATM any longer,” said Gabriello Mancini, the Monte dei Paschi Foundation’s chairman, in an interview in his 13th-century headquarters building overlooking Siena’s famous Piazza del Campo. “It could cause some problems because some groups got used to having our support.” The foundation has cut back donations across Tuscany by 80% in the past three years. Those taking a hit range from a horse race run through the narrow streets of Siena to a biotech facility researching cures for neurological diseases.

The drama marks a new phase in the continent’s banking crisis.

Irish banks ran into trouble due to reckless real-estate lending. Greek banks have been pummeled by their country’s economic implosion. French banks are paying the price for their boom-time expansions into countries like Greece.

Italian banks, by contrast, are in trouble for what once seemed like a conservative investment: owning Italian government debt.

Continued at The Wall Street Journal | More Chronicle & Notices.

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