12-23-2016, 10:45 AM
Led by prime minister, Paolo Gentiloni, the government is now expected to force private investors owning about €2.1bn of the bank’s bonds to take losses.
Italy to bailout Monte dei Paschi di Siena bank with €20bn rescue fund | Business | The Guardian
“European banking stocks are expected to remain under pressure. [The] Italian banking crisis is enhanced by mounting tensions in Spanish banks, which are now due to pay billions of euros on mortgage deals after they lost the EU case over mortgage-floor clauses,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
European stocks slip, as Banca Monte dei Paschi stands on the brink - MarketWatch
While Monte dei Paschi is considered a small bank relative to multinational giants, the fallout from a bailout could have far reaching consequences for global investors. There are concerns that the jitters could spread to other Italian banks and that the €20 billion set aside by the government on Wednesday won’t be enough to prop up all of the struggling lenders. Ipek Ozkardeskaya, senior market analyst at London Capital Group, estimates Italian banks need €52 billion to be rescued.
5 things to know about Banca Monte dei Paschi di Siena’s crisis - MarketWatch
And there’s another issue. A taxpayer funded-bailout carries the risk of a political backlash that could empower the so-called euroskeptic and anti-establishment 5 Star Movement. With the risk of snap elections in Italy next year, voter anger could propel this populist party into the driver’s seat. That could mean “Quitaly” or “Brexit 2.0.” Additionally, a euroskeptic government in Italy could lead to a surge in bond yields, credit downgrades and added troubles for banks, analysts say.
5 things to know about Banca Monte dei Paschi di Siena’s crisis - MarketWatch
As the poster child for the Italian bank crisis, Monte dei Paschi is saddled with a mountain of non-performing loans that is eating into its capital. It has the highest proportion of bad loans among Italian banks at around 36%. It has been asked to shed €28 billion of those loans to make it healthy again.
5 things to know about Banca Monte dei Paschi di Siena’s crisis - MarketWatch