By Francesco Guarascio
BRUSSELS (Reuters) - Euro zone finance ministers will not ask Italy to clarify its bank rescue plan, the head of the eurogroup said on Thursday, in a bid to defuse criticism that the scheme undermines the foundations of new bailout rules.
The Italian government used a clause in EU rules on banking liquidation in an attempt to reduce losses on creditors of bank Monte dei Paschi di Siena <BMPS.MI> when it decided in December to rescue the ailing bank with taxpayers' money.
The move has raised concerns in Germany, the euro zone's biggest economy, and among regulators that new rules aimed at preventing taxpayers from footing the bill of bank rescues will never be fully applied.
"The eurogroup has no formal role to play in bank resolutions," Jeroen Dijsselbloem told reporters before a monthly meeting of euro zone finance ministers, known as eurogroup, in reply to a question on whether clarifications were needed from Italy on the rescue plan.
A discussion on the legality of the Italian plan was included in a preliminary agenda of the monthly meeting of euro zone finance ministers, two EU officials said.
But the debate was eventually erased from the formal agenda, as ministers feared it may "set a precedent" which could have sparked talks on several other individual banks in a crisis, a European diplomat said.
"Italy is talking with the Commission and with the bank supervisor in Frankfurt, and there will be a restructuring plan," for Monte Paschi, Dijsselbloem said, adding: "Let's wait for the outcome of that."
The EU executive Commission and the Frankfurt-based European Central Bank are assessing the Italian plan and will issue formal opinions once the bank has finalised a restructuring plan, involving staff cuts and a compensation scheme for investors who were mis-sold risky bonds.
Officials had questioned the holding of a debate among euro zone finance ministers on the plan, while it was still under assessment by other EU institutions.
Italy's finance minister Pier Carlo Padoan met earlier on Thursday with EU antitrust commissioner Margrethe Vestager to discuss "banking issues", EU and Italian officials said.
Padoan told reporters the meeting was "constructive" and said it will be followed by other meetings on this issue.
(Reporting by Francesco Guarascio; Editing by Toby Chopra)