Italy banking: special focus
Euromoney's latest coverage of Europe’s fourth-largest economy as its banking sector stands on the brink.
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.
Analysts warn Italy will be a bigger shock to Europe than anything Turkey has to offer, as potential crises go.
Italy flows up despite populists’ impact on bond yields; warns of peak debt across the West.
Despite the latest attempts to stymie them, Eurosceptic populists remain the most powerful political force in Italy – largely thanks to anger at a banking crisis, often fanned by the ECB. Now their approach to power is killing the last chance of fixing the banking union, and possibly the euro.
Firm buys Credito di Romagna stake; European banking licence adds to appeal.
The elections will deliver a new government, but the old challenges remain.
Investors can support their local lenders by preparing to sell them.
Banca Carige pulled off a recapitalization last December that even chief executive Paolo Fiorentino thought difficult. It raised more than four times its market cap, just ahead of an ECB deadline. Euromoney asks how he did it and how the bank can reward its investors.
Discussions about European NPLs are essentially discussions about Italian NPLs.
Survivor of the year/‘How’s he still in a job’ award? Bank of Italy governor Ignazio Visco
With progress made on profitability, the chief executive is turning to deep-seated organizational challenges
An investment fund focused on banks with a slant on Europe and Italy might sound like a recipe for disaster, but Davide Serra of Algebris tells a story of market-beating returns and snowballing AuM, and thinks the best times lie ahead.
Nearly every time Europe’s Bank Recovery and Resolution Directive is called into play, there seems to be a new justification for using public money.
A textbook case, a long-inevitable state bailout and a brazen political fudge: Europe’s BRRD has had something of a rough ride this summer. As the region’s banks brace themselves for the capital-raising marathon that is MREL, are the new resolution regulations actually doing more harm than good?
Europe’s investor prospects are superficially safer due to economic recovery, but elections in Germany and in Italy, especially, present tail-risks. This is a manifestation of deeper uncertainty urging a fresh approach to risk management.
As a self-described ‘insider-outsider’, Jean Pierre Mustier’s return to UniCredit has transformed the image of Italy’s biggest bank – inside and out – over an extraordinary 12 months as CEO.
Firm behind Atlante rubbishes private offers for Veneto banks; freed funds for MPS deal a ‘coincidence’.
Just two weeks after Banco Popular’s rescue was hailed as a triumph of Europe’s post-crisis resolution regulation in action, Italian taxpayers are footing the €17 billion bill for the collapse of two long-troubled lenders. Maybe that post-crisis regulation isn’t quite as effective as it is supposed to be.
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?
An improving eurozone economy is failing to provide investors with encouragement about Italy’s prospects as it comes back into focus after the French elections.
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.
As UniCredit goes from zero to hero, is Intesa taking the opposite route?
Breaking the sovereign/bank nexus has been a priority for policymakers since the global financial crisis. The problem is particularly acute in Europe. One proposal, to end the preferential capital treatment for the sovereign exposures of banks, may presage a revolution in European capital markets. But getting Europe’s rival factions to agree on a policy is far from simple.
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.
Bank warns on AT1 coupon if €13 bln rights issue fails; move highlights importance of capital increase.
Italy alone accounts for 26% of the total, but nearly 80% of all European bad debt is held in six countries.
Italy could be clawing itself out of a pit of worry about its banks, according to the latest Euromoney Bank Risk results.
As EGM approves capital increase, lender spells out impact on regulatory capital if things go wrong.
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.
It is time European regulators proposed a BRRD that is fit for purpose.
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.
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
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.
The bad-debt crisis killing some of Italy's biggest banks looks likely to get worse before it gets any better. That has frightening implications, not just for the country, but for the rest of Europe as well. In the following features, Louise Bowman and Dominic O'Neill investigate the options left to political and financial leaders from Rome to Frankfurt, and reveal the depth of the problems they face in Italy's bad-debt heartlands.
Investor prospects in Portugal, Ireland, Spain and even Greece have brightened this year, but Italy could still put a damper on the recovery.
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.
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.
Former BAML and JPM banker takes over troubled bank; share-price fall seen scuppering €5 billion rights issue.
Italian banks have allowed non-performing loans to swell to such numbers that they are now a central concern for the European and global financial system. Delving into Italy’s bad-debt suggests the problem might be even worse than public figures show. Can the country turn it all round – even if it has the time to do so?
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.
The ECB’s demand for a €1 billion capital increase in the banking union’s first big merger between Banco Popolare and BPM has dowsed hopes for a slew of similar deals that might add value to banks that desperately need it.
Benign scenarios used by EBA; CCAR reveals greater capital shortfalls.
The Italian banking sector suffered a spanking in the European Banking Authority’s stress tests last week, but the banking system is not the only issue for the sovereign. Italy’s risk score could drop further this year if the government does not gain a mandate to carry out much-needed reforms.
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.
ECB demands MPS shed €10 billion loans; last minute private deal scrambled.
Country-by-country assessments of Europe’s banking sector show that risks are at new highs, as the financial services industry struggles to cope with the aftershocks of the 2007/08 crisis. Resolving the Italian bank crisis is key to how it will all pan out.
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.
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.
Under a new CEO, investors in Italy’s biggest bank need to see shock and awe.
Bank backstop fund competes with private equity; doubters say it should be four times bigger.
State-backed Cassa Depositi e Prestiti's (CDP) mission to jumpstart the Italian economy has been met with scepticism. CEO Fabio Gallia tells Euromoney why he is convinced it will succeed, while fears over Italy's NPL conundrum and bank-restructuring saga refuse to abate.
Mixed regulatory messages cloud the outlook after Italy’s first big bank merger since 2008.
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.
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).
Delve into the details of their respective economic and political prospects, and Italy’s investor credentials are seemingly more favourable than Spain’s.
State bad debt scheme to chip not chop; BCC reform could create top-three lender.
Troubled Tuscan lender taps new funding; ABS benefits from ‘safe haven’ status.
Bail-in uncertainties remain; Portugal and Italy mark tough start for BRRD.
Europe’s plan for a bad bank in Italy, it turns out, is to not have a bad bank at all.
Italy, Austria, Germany take brunt of 18,000 job losses; lingering capital doubts overshadow efficiency drive.
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.
International investors are scrambling to establish themselves as the country’s huge NPL market finally starts to creak open. But this is not a market for the faint-hearted, and achieving those double-digit rates of return will require skill and unrivalled local knowledge.
CFO leaves MPS for UniCredit after new chairman arrives; lack of buyers stymies M&A.
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?
The onslaught of regulatory change and capital requirements is putting pressure on co-operative ownership of banks across Europe, but especially in Italy.
Renzi’s reforms and favourable winds seem to be working some magic on the country’s numbers.
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.
Fineco share price shoots up; rivals set up similar businesses.
Only structural change, not tweaks, will bring a recovery across Italy’s banking sector.