Quiet crisis: why battle to prop up Italy's banks is vital to EU stability

CLAPTON

Crashy_Time wrote: »

More a "devaluation"?

no, devaluation is the change (reduction) in value in relation to other currencies

printing money may or may not cause such a deduction

Thrugelmir

CLAPTON wrote: »

no, devaluation is the change (reduction) in value in relation to other currencies

printing money may or may not cause such a deduction

Will cause is a certainty.

worldtraveller

Italy is preparing to protect its banks from a destabilising share sell-off following last week's Brexit vote, sources told Reuters on Monday.

Rome is concerned that Italian banks, which are saddled with 360 billion euros (£300.5 billion) of bad loans, a third of the eurozones's total, risk attack by hedge funds betting that Brexit turmoil could tip them into full-blown crisis.

A banking source familiar with the government's thinking said officials were preparing measures to counter any such speculative attack, including the use of a government guarantee.

Reuters

michaels

If my money was in a bank protected by a guarantee from the Italian govt I would move it.....

worldtraveller

Italy's Monte dei Paschi is once again expected to be among the banks that fare worst in EU stress tests, a concern for investors across Europe who fear its frail finances could destabilise the region's banking system.

The results of the 2016 health check for 51 lenders across the European Union will be published by the European Banking Authority (EBA) at 21:00 London time on Friday.

Monte dei Paschi, the world's oldest lender, has become a focus for Italian and European market concern. It is saddled with 47 billion euros (£39.3 billion) of non-performing loans, the largest among big European banks. This, combined with its capital shortfalls, risks creating contagion across the region.

Reuters

worldtraveller

Monte dei Paschi is to be rescued by the Italian state using a new €20bn bailout package, as a last-gasp private sector rescue plan for the world’s oldest bank looked set to fail, forcing losses on bondholders.

The government rescue, which had long been resisted in Rome, is designed to draw a line under the slow-burn crisis in Italian banking that has alarmed investors and become the main source of concern for European financial regulators.

The state funds to rescue the bank would come from a €20bn package approved by both houses of parliament on Wednesday that could be used to bail out several of the country’s most fragile banks. Goldman Sachs estimates they need €38bn to be adequately capitalised.

A backlash against a taxpayer-funded bailout of Italy’s weakest lenders has already begun. Codacons, a consumer lobby group, estimated €20bn ploughed into Italy’s failing lenders would cost each Italian family €833

FT

Che sorpresa! :rotfl:

Just a bit more needed later? :whistle:

A_Medium_Size_Jock

Never were truer words spoken - these from Michael Hewson at CMC markets and reported in thelocal.it :

"Whatever happens in the next few days, whatever plan is implemented won't resolve the underlying problem in Italy, which is it has too many banks and too much bad debt, across the entire sector," said Michael Hewson at CMC Markets.

Data compiled by Bloomberg suggest that Italian banks need at least 52 billion euros to clean up their balance sheets.

http://www.thelocal.it/20161221/bmps-stock-tumbles-as-finance-drive-stutters

Dird

http://www.bbc.co.uk/news/business-38401674

40k small investors with an average 50k euros invested in the bank....what a joke. When they kept mentioning small investors I thought it'd be millions of people

Thrugelmir

Dird wrote: »

40k small investors with an average 50k euros invested in the bank....what a joke. When they kept mentioning small investors I thought it'd be millions of people

So 40k isn't small. How would you feel about losing your life's savings of £50k. Perhaps other banks are to follow as well.

michaels

But what are they invested in? If it is shares or bonds then why shouldn't they take the loss? If it is deposits then aren't they protected?