Algebris’ Serra gives Italy’s weakest links a year to fail

Large swathes of Italy’s banking sector could start to fail next year if government bond yields do not fall dramatically, according to one of the most active investors in European banks.

Davide Serra, chief executive of Algebris Investments, also gives Italy’s populist government coalition less than 12 months to survive, whatever its future path.

But before the coalition entirely reverses its budget intentions – and before either side is forced to exit the coalition – widening government bond spreads will hurt Italian banks’ already dismal profitability, says Serra.