Sofferenze loans – literally, 'the suffering' – make up 60% of Italy’s non-performing loan stock. At €200 billion, that’s some 11% of the country’s GDP. Fears about the fate of Europe’s fourth-largest economy as its banking sector stands on the brink have centred around the world’s oldest bank – Monte dei Paschi di Siena. The European Central Bank has had Monte’s feet to the fire to clean up its balance sheet. But, surrounded in Malebolge-like cliffs of bad debt of about €50 billion and having burned through €8 billion of freshly raised capital before, plans to get the bank out of the eighth circle of hell have been fraught with problems.
Euromoney has collected its best features from recent months covering the Italian loan problem. Together, they represent a thorough and fascinating look into the Italian banking crisis.
Italy banking: Status symbols
Investors can support their local lenders by preparing to sell them.
Italy banking: How Carige beat the clock
NPLs: European disunion
Discussions about European NPLs are essentially discussions about Italian NPLs.
Alternative awards of the year 2017
UniCredit: No end to Mustier's tests
With progress made on profitability, the chief executive is turning to deep-seated organizational challenges
ECB piles more pressure on Italian mid-tier
Western Europe: European banking’s behind-the-scenes activist
Bank resolution: The exception does not always prove the rule
Banking: Throwing the bail-in out with the bath water
Italy is still Europe’s main political tail-risk
UniCredit: Mustier’s magical year
Italy rescue fund manager hits back at critics
Firm behind Atlante rubbishes private offers for Veneto banks; freed funds for MPS deal a ‘coincidence’.
Taxpayers bail out Italian banks
The ECB’s inflation outlook in March gave hope that, after a year in intensive care, European banks are recovering. There is a sense that Basel risk-weighting rules pose less of an immediate danger, while peak regulation has passed. Is European banking cured or only in remission?
Country risk: Italy is the volcano waiting to erupt
Consolidation is coming, says UBI Banca CEO
As UBI Banca prepares a new capital raising linked to its purchase of three rescued banks, CEO Victor Massiah says his bank and others can do more to build economies of scale through mergers.
Banking: Italy’s top table turns
Banking: Europe’s battle to fix the ‘doom loop’
European NPLs: Think global, act local
Setting up a European bad bank is a dauntingly complicated and time-consuming proposition. Europe’s NPL problem needs to be tackled at the national level.
UniCredit breaches cap ratios after Q4 charges
EBA’s Enria says Europe-wide bad bank is essential to avoid Japan-style stagnation
Western Europe: Portugal bank risk spikes as Italy turns corner
No pressure! UniCredit warns it could struggle to pay AT1 coupon if rights issue fails
As EGM approves capital increase, lender spells out impact on regulatory capital if things go wrong.
Mustier makes his mark on UniCredit
UniCredit CEO Jean-Pierre Mustier has unveiled his new strategic plan for the bank. At its heart is a €13 billion rights issue. But look deeper and Mustier is at pains to stress UniCredit’s European, rather than Italian, credentials. He’ll need to convince shareholders that this time the bank has a real prospect of breaking free of the country’s bad debt troubles.
Italy banking: The ever-recurring nightmare of bailout
It is time European regulators proposed a BRRD that is fit for purpose.
Huge rights issue at heart of Mustier’s new plan for UniCredit
UniCredit CEO Jean-Pierre Mustier has unveiled his new strategic plan for the bank. With a €13 billion rights issue at its centre, he will need to convince shareholders that this time the bank has a real prospect of breaking free of the country's banking troubles.
UniCredit shakes off Italy tag with NPL fire sale
The bank hopes a deal to offload bad debts to Fortress and Pimco will show investors that it is putting its NPL issues behind it
MPS and state aid: Hope, or a slippery slope?
Reports of a government plan to buy subordinated bonds and convert them into shares in Monte dei Paschi di Siena suggest that a state-backed rescue is now inevitable.
Inside Italy's circle of NPL hell
Italian shock might blow a hole in stronger Piigs risk profile
Investor prospects in Portugal, Ireland, Spain and even Greece have brightened this year, but Italy could still put a damper on the recovery.
Italian banking: MPS mayhem returns
The Italian lender’s revised capital plan prompted its share price to plunge 39% in a matter of hours. Time is running out for a capital raise by year-end.
Italy’s rising risk is warning of an existential eurozone shock
Its risk score plunged the most of any country worldwide in Euromoney’s country risk survey in Q3 2016, highlighting how eurozone investors must remain on their toes.
Italy: New MPS chief unveils debt swap as Viola exits
Former BAML and JPM banker takes over troubled bank; share-price fall seen scuppering €5 billion rights issue.
Inside Italy’s bad-debt heartlands
Italy: Too big to bail
Every proposed scheme for sorting out Italy’s bad debt problems has its own shortcomings. And that’s before taking into account the fact that those problems could get worse. Pressure from the ECB is fanning the flames of the crisis. Fixing legacy problems could now require dramatic action.
Italy: ECB’s first merger brings more worry
Bank capital: Italy worries mask wider malaise in Europe
Benign scenarios used by EBA; CCAR reveals greater capital shortfalls.
Structural problems and underperforming economy the biggest threat to Italy
Italian banking: Squaring the circle
Italy’s banks cannot deal with their NPLs unless they have capital, but they are not being allowed to recapitalize until they have dealt with their NPLs.
Bank capital: MPS secures 11th hour rescue plan
ECB demands MPS shed €10 billion loans; last minute private deal scrambled.
Europe’s bank stability is in question, say country risk experts
While the accelerated sales of stakes in Fineco and Pekao signal a new style, UniCredit's returning CEO says HVB still fits with the core Italian business.
Country Awards for Excellence 2016: Italy
It has been a torrid year in Italian banking. The third-biggest bank searched in vain for a merger partner, consolidation among cooperatives went round in circles, a bad-debt scheme flopped, and big problems at little banks threatened to topple the whole system. Finally, as Euromoney goes to press, the country’s biggest bank is rudderless.
Time to fix UniCredit
Under a new CEO, investors in Italy’s biggest bank need to see shock and awe.
Italy banking: Atlas wrestles critics over size
Bank backstop fund competes with private equity; doubters say it should be four times bigger.
Italy banking: Inside Cassa Depositi e Prestiti
Italy banking merger: Beginning or end?
The Single Supervisory Mechanism, the eurozone’s new banking supervisor, is tasked with combating financial fragmentation, building a banking union and, above all, making Europe’s banks investable once again. The first few months of its tenure were some of the most difficult since the dark days of the euro crisis. Bankers’ scepticism about the new regime is the least of their worries.
SSM: Banks brace for punishment on credit risk, sovereign debt
Apart from standardizing the numerator for banks’ solvency ratio (capital), the eurozone and the Basel Committee on Banking Supervision are going to analyse and, where necessary, harmonise the denominator (risk-weighted assets).
Country risk: Why Italy is a safer bet than Spain
Delve into the details of their respective economic and political prospects, and Italy’s investor credentials are seemingly more favourable than Spain’s.
Italy: Rome fiddles as banks burn
State bad debt scheme to chip not chop; BCC reform could create top-three lender.
MPS securitization beats bad debt, bail-in rout
Troubled Tuscan lender taps new funding; ABS benefits from ‘safe haven’ status.
EU banking union ushers in new era
Italy’s bad bad bank
Europe’s plan for a bad bank in Italy, it turns out, is to not have a bad bank at all.
Western Europe: UniCredit strategy review prompts drastic cuts
Bank consolidation: Europe’s missing link
The need for European bank consolidation is clear. Southern European banks are numerous small and poorly valued. But the good news is that consolidation is getting under way in Italy and the Iberian peninsula – particularly Spain. Bank M&A could accelerate, if and when regulatory uncertainty clears.
Inside the race for Italy's NPLs
Italian banks rejig top brass as stocks stagnate
CFO leaves MPS for UniCredit after new chairman arrives; lack of buyers stymies M&A.
Italy co-opts its co-ops
After years of crisis, a quiet revolution is happening in Italian banking. A mountain of bad debt and a government and regulator intent on reform have ended a fundamental tenet of the cooperative system – with implications for the vast tracts of cooperative banking elsewhere in Europe. Will the reform and a wave of mergers succeed in bringing Italian capitalism out of the regions and into the 21st century?
Italy banking: Popolari identity crisis
Against the tide: Is Italy turning?
For European banks, the days when a lack of big international operations was seen as a weakness are gone. Nowadays, some of the continent’s biggest and most successful banks are using large market shares in a single market in increasingly profitable ways – setting an example for bigger peers. Euromoney asks their CEOs how they are doing it.
Western Europe: Wealth managers unlock Italian digital banking
Fineco share price shoots up; rivals set up similar businesses.
Banking in Italy: Economies of scale
Only structural change, not tweaks, will bring a recovery across Italy’s banking sector.