Quick read: European banks' retail-shareholder divorce
Long years of losses and scandals, and now new regulation, spell a break-up with European banks’ bedrock of support in their retail investors, who have often been their own clients. Read on for a guide to Dominic O’Neill’s story on their split and the deep implications for Europe’s financial sector.
Dec18Cover 408px1. A tale of two capital raisings: what Italy shows about the future of banks’ investors
The crucial rights issues of two Italian mid-tier banks over the past year show the direction of European banks’ traditional reliance on retail investors. This could be a turning point, as political scandals are making it much harder for even Italian banks to rely on their depositors for capital.
“We worked very much in the local constituency… leveraging the traditional channels” – Paolo Fiorentino
2. Four million Santander shareholders: why retail matters for Europe’s biggest banks
Retail shareholders account for big parts of even the big banks in Europe, particularly in Spain. While their presence is welcomed, it can result in problems, which can be costly to resolve.
“It’s a circular reference. If the share price falls, retail investors might not differentiate between their deposits and shares" – Alastair Ryan, Bank of America Merrill Lynch
3. Regulators tighten the screw: how marketing shares and sub-debt to retail is getting a lot harder
As Europe tries to secure its bail-in framework, supervisors are applying Mifid II with particular zeal to banks’ marketing of their own securities to retail clients.