Italy's government stepped in at the weekend to liquidate two ailing lenders from the northern region of Veneto in a controversial bid to avoid a bank run.
After an emergency cabinet meeting on Sunday, Rome agreed to provide 5.2bn of fresh capital to Intesa San Paolo in exchange for acquiring the 'good' assets of Banca Popolare di Vicenza and Veneto Banca.
That amount included 4.8bn in order to help Intesa maintain its capital ratios and an additional 400m of guarantees to help protect it against the risk that some of those assets might sour.
In parallel, the Italian government said it would offer as many as 12bn in additinal guarantees to help cover potential losses from the two lenders' bad loan portfolios, which would be hived off into a so-called 'bad' bank.
Commenting on the weekend's events in Italy, Michael Hewson, chief market analyst at CMC Markets said: "so much for the so called new single European rule book and the much vaunted European Banking Union. It appears that there is one rule for Spanish banks, and the recent rescue of Popular Bank, and another for Italian banks.
"Let's hope the Italian government has deep pockets given that this particular bailout is a fraction of the non-performing loans in the Italian banking system, of which it is estimated there are about 300bn."
As a part of the agreement, the branches of the two Veneto-based banks were to begin trading on Monday under the Intesa brand.
The arrangement was approved by the European Commission despite the fact that it did not 'bail-in' the senior bondholders of the two banks nor its big depositors.
Brussels based its decision on the fact that the liquidation of the two banks meant no competition issues would arise as a result. Furthermore, the EC concluded that to not inject funds would have a disproportionately negative effect on the region's economy.
Intesa was the only lender who tabled a bid for the assets, offering to pay 1.0 for the good assets.
Retail junior bondholders would also be made good by Intesa, who said it would provide 60m to fully reimburse them.
In April 2016, the European Central Bank found the two lenders were in need of 6.4bn of extra capital but neither was able to raise the required amounts in private markets.
As of 0821 BST shares
in Intesa Sanpaolo were higher by 3.44% to 2.71.