— Analysis

  1. Markets

    Italian banks take up the most liquidity in ECB's Tltro2, €62 bn out of €233 bn total

    by Luca Davi

    IT
    24 Exclusive content for IT24

    European banks showed record appetite in the fourth and final sale of cheap funds by the European Central Bank, also known as Tltro2. Demand from 474 lenders was for €233 billion, double the expected size and a record since the program was launched. It’s difficult for European banks to waste a good opportunity to fund themselves at almost zero interest rates with four-year maturity loans, especially when loans can yield up to ...

  2. Markets

    Why Veneto popolari banks' shareholders feel betrayed, even as they lean towards accepting a settlement

    by Katy Mandurino

    IT
    24 Exclusive content for IT24

    More than three years have passed since the case of the “Veneto popolari” mutual banks exploded, starting the financial decline of two major Italian lenders: Banca Popolare di Vicenza and Veneto Banca. These two banks were strongholds of one of the richest and industrialized regions of Europe, the Veneto in Northern Italy. And still we are unable to come to terms with how such a collapse could have happened. It has been an unrelenting ...

  3. Markets

    The €5.5 bn price tag for rescue of four regional banks shows the high cost of wasted time

    by Marco Ferrando

    IT
    24 Exclusive content for IT24

    While the closing of the deal will still take some time, the sale of CariFerrara to Banca Popolare Emilia Romagna (BPER) for one euro is a step to wrapping up the sale of the four “good” banks created from their €3.6 billion rescue in November 2015 (CariFerrara, Banca Marche, Popolare Etruria and CariChieti). The final price, according to Il Sole 24 Ore calculations, is very high: around €5.5 ...

  4. Markets

    Italian banks are getting a "bonus" from rising European interest rates

    by Morya Longo

    IT
    24 Exclusive content for IT24

    European banking shares rally, supported by expectations of a interest margin boost from likely higher US interest rates. But every coin has two sides: if interest rates go up, European banks could suffer losses in their bond portfolios. Before celebrating, a few questions remain: will higher interest rates benefit all banks? What European credit system would benefit the most? Could there be side effects for banks' balance ...

  5. Markets

    Maxi-merger LSE-Deutsche Boerse at risk over Milan's MTS

    by Antonella Olivieri

    IT
    24 Exclusive content for IT24

    Over the years, there have been several attempts to combine the stock exchanges of London and Frankfurt. While the main hurdle was initially represented by derivatives, now the problem are the post-trading and especially clearing activity. The Brexit referendum has made things worse and the agreed plan to have the new company headquartered in London has been called into question. But nobody expected the problem to come from Italy, especially from ...

  6. Markets

    A strong signal of confidence in Italy

    by Alessandro Graziani

    IT
    24 Exclusive content for IT24

    What would have happened to the spread, to yields of Italian sovereign debt and more generally to the perception of risk in Italy among global investors if UniCredit’s €13 billion maxi capital increase hadn’t gone forward? Better not to think about it. Because the €20 billion provided by the state to rescue banks in crisis would, by all accounts, not have been enough. It should be acknowledged that the bank's French CEO ...

  7. Markets

    Bank rescue law approved by parliament, ball now passes to lenders

    by Davide Colombo and Gianni Trovati

    IT
    24 Exclusive content for IT24

    The €20 billion bank rescue bill was voted into law on Thursday, and now the ball passes to the banks, who want to, or should, request public guarantees for liquidity measures or state intervention for precautionary recapitalization. The attention at this point is focused entirely on Monte del Paschi, which is set to receive a €6.6 billion investment from the government. It will then move to the Veneto banks, for which the CEO ...

  8. Markets

    The long tail of NPLs and the profitability challenge

    by Fabio Pavesi

    IT
    24 Exclusive content for IT24

    For Italian banks, at a level of balance sheet results, the hands of the clock have turned back dramatically to an era that had seemed definitively behind us. Last year saw a steep decline in net profitability. Losses of nearly €15 billion accumulated by major banks wiped out, in one fell swoop, a profit increase (that proved to be ephemeral) in 2015, when the banking sector managed to turn in a profit of nearly €6 ...

  9. Markets

    Balance sheet cleanups cost Italian banks €14.8 billion in losses last year

    by Marco Ferrando

    IT
    24 Exclusive content for IT24

    Each of Italy’s big banks has apparently had a good reason to clean up its loan portfolios in the final months of 2016: UniCredit because of the capital increase, Banca Monte dei Paschi di Siena because of the imminent state bailout, Banco BPM because of its merger, and UBI Banca so it to take over the “good banks” resulting from the rescue of four regional lenders at the end of 2015. Italian banks had an extraordinary 2016, when ...

  10. Markets

    Full-year Italian bank earnings show bad loans have stopped growing

    by Alessandro Graziani

    IT
    24 Exclusive content for IT24

    The “cargo hold” of the Italian banking fleet remains flooded by non-performing loans (NPLs) but is no longer taking in water. The flow of fresh impaired loans is returning on average to pre-crisis levels, as shown by the 2016 results being approved by Italy’s largest banks. Two years of timid recovery, after the slowdown of the previous years, were enough to stop the flows of new non-performing loans ...

  11. Markets

    Market instability has reduced the weight of Italian banks' core shareholders

    by Marco Ferrando

    IT
    24 Exclusive content for IT24

    Governance. Low interest rates, rules in continuous flux, extreme volatility. At banks, short-term shareholders now have the upper hand as instability has reduced the weight of the long-term investors that used to control the Italian banking system. “Between regulatory uncertainties and their increasingly difficult situation, banks, at this point, are only fit for hedge funds. Or for institutions more interested in ...

  12. Markets

    As investors eye France's political, Italy's fragility in the picture

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    A violent “risk-off” wave widened spreads all across the European government bond market yesterday: the sell off hit all govies except the German Bunds, in a typical flight to quality mood with search for safe havens focusing on highly rated short term paper. Italy was not the trigger this time but nevertheless it was the hardest hit. In the midst of turbulence, Italy continues to be viewed as the weak ring of the euro chain: ...

  13. Markets

    EBA's proposed European "bad bank" would have up to €250 billion firepower

    by Luca Davi

    IT
    24 Exclusive content for IT24

    A €200-250 billion fund: this is the size of the European bad bank being sought by the European Banking Authority (EBA). The plan, recently presented by EBA President Andrea Enria, has drawn strong interest from investors, but also some concerns. The project may be still at an early stage, but the details of the proposal to revive the non-performing loan (NPL) market remain unclear. “A EU bad bank is ...

  14. Markets

    Political risk is on the rise in Italy and France: in spite of QE, spreads on government bonds are creeping up

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    Political risk is on the rise in the European sovereign debt markets but the ECB’s QE is making it almost invisible. Yet, it is there. One just has to look for it. Let’s take Italy and France. Both countries are going through political turbulence and the yield spread between Italian 10-year BTPs and German Bunds has recently widened up to 188 bps, its highest level since the start of the Public Sector Purchase Program launched by ...

  15. Markets

    Mediaset's three-year strategic plan aims at supporting the stock

    by Antonella Olivieri

    IT
    24 Exclusive content for IT24

    Mediaset shares reacted positively to a presentation in London of the company’s new three-year strategic plan. They ended Wednesday’s session up 0.86% at €4.21. The plan, and above all the quantifying of EBIT improvement, was calculated to support the stock. The share price has doubled over the past month as Mediaset became a target of France’s Vivendi, which raked in 28.8% of the Italian media ...

  16. Markets

    With Luxottica's marriage with Essilor, Leonardo Del Vecchio has dealt with the issue of his succession

    by Marigia Mangano

    IT
    24 Exclusive content for IT24

    The marriage of Italian eyewear company Luxottica and French lens manufacturer Essilor is a big industrial bet. With almost €50 billion of combined capitalization and total revenues of more than €15 billion, the numbers involved are impressive. But beyond the future value creation that will come from the merger of the two groups, according to the most attentive observers the deal seems to meet Luxottica founder Leonardo Del Vecchio’s needs ...

  17. Markets

    Italian capitalism's unsolved problem

    by Roberto Napoletano

    IT
    24 Exclusive content for IT24

    Analysts welcomed the merger between Luxottica and Essilor, and shares rallied. Europe has a new global eyewear champion, with €50 billion of market capitalization, 140,000 employees, operations in 150 countries and which is ready to expand in emerging markets. Leonardo Del Vecchio, 81, who spent his childhood at the Martinitt orphanage and worked in a tool shop, has built a global leader from nothing which is a symbol of ...

  18. Markets

    DBRS rating cut not a surprise, but could impact yields a bit

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    Italy lost its single “A” status yesterday: DBRS, the ratings agency with “deep roots in Canada” founded in 1976, downgraded the Republic of Italy to BBB (high) from A (low); but the trend is now “stable” as this decision concludes the review with a negative implication. “It is a big move, it is a very significant move entering into a new rating category,” Fergus McCormick, the ...

  19. Markets

    DBRS to give a sense today of how Italian risk is perceived

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    In the first medium- to long-term auction of its 2017 issuance program, Italy sold BTPs to raise €7.25 bn on a wide range of maturities, from 3 to 20 years, and settled on a wide spectrum of yields as there was a mix of borrowing costs: the 20-year BTP got more expensive as it was sold at 2.53% compared to 1.91% on September 2016, but the 3-year BTP was placed at 0.06%, 24 bps lower than on ...

  20. Markets

    Fiat Chrysler Automobiles is not facing a Dieselgate

    by Andrea Malan

    IT
    24 Exclusive content for IT24

    The Environmental Protection Agency’s case against Fiat Chrysler Automobiles can’t be compared to Volkswagen’s Dieselgate: the accusation against FCA is not fraud but lack of disclosure and exceeding the limits of nitrogen oxide emissions. These are administrative and not criminal violations, and with a much lower potential financial impact: $4.6 billion is the maximum fine conceivable based on the number of vehicles ...

  21. Markets

    Political risk and higher interest rates weigh on Italy's public debt in 2017

    by Claudio Celio

    IT
    24 Exclusive content for IT24

    Italian Treasuries seem to have started 2017 like they ended 2016. Yields in the first BOT auction of the year hit a new low (-0.25% yesterday) in what appears to be the last in a chain of records started well before 2016. Experts caution however that the playbook of the past few years may look a bit different in the months to come. Yields on short-term bonds have been on the low side, even dipping into negative territory, for at ...

  22. Markets

    For the shareholders of the 7 failed Italian banks a €24 bn bonfire

    by Fabio Pavesi

    IT
    24 Exclusive content for IT24

    A destruction of wealth equal to 1.5% of Italy's GDP. The €24 billion that went up in smoke -losses suffered by shareholders of banks that failed and were rescued by the state - is the bitter epilogue to Italy's banking crisis. This massive failure involved more than 380,000 people: shareholders who saw their investment in MPS, Popolare di Vicenza, Veneto Banca and four so-called “good banks” (Banca ...

  23. Markets

    Italy to remain top EU issuer in 2017 amid changing dynamics

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    Looking at issuance, yields, spreads and sovereign risk in the eurozone government bond market, 2017 is going to be quite different in many aspects compared to 2016. Yields could rise slightly in Europe due to the shift towards fiscal expansion in the US and the Federal Reserve entering into a soft tightening; the ECB might announce a real QE “tapering” in the second half of the year, even if the European central bank is expected to ...

  24. Markets

    Vivendi's takeover of Mediaset would be a takeover of Italy's entire media sector

    by Marco Mele

    IT
    24 Exclusive content for IT24

    French conglomerate Vivendi's attempted hostile takeover of Mediaset is much more than a move to expand in commercial broadcasting or television production outside its borders. Given the peculiar structure of the Italian media sector, it equates to an attempted takeover of an entire industry, of a piece of the nation itself. Because Mediaset isn't just your run-of-the mill TV company. It's a group that at the end of 2015 had an ...