Categories: Base Metals / Energy / General Market Commentary / Precious Metals
Topics: General Base Metals / General Energy / General Market Commentary / General Precious Metals

Italian Banks Flirt With Disaster Again as Renzi Teeters

Italian Banks Flirt With Disaster Again as Renzi Teeters

--Markets have priced in impact of a ‘No’ vote in referendum


--Tottering Monte Paschi the wild card as it begins equity sale

They’re burdened with a mountain of bad loans. Their stocks have cratered. And they have to operate in an economy prone to recession and political upheaval.

Signs have been mounting for months that Italy’s weakest lenders, and in particular Banca Monte dei Paschi di Siena SpA, were sliding toward the precipice, threatening to reignite a broader crisis. 

But don’t be surprised if Italy’s troubled banks sidestep disaster yet again.

The next chapter could start Sunday, when polls suggest Italian voters will reject a constitutional change to streamline the legislative process, a decision that could lead Prime Minister Matteo Renzi to resign. Should he quit, Italy may enter a period of political and market turmoil just as its fragile banks are struggling to win back the confidence of investors and regulators. Monte Paschi is in the middle of a 5 billion-euro ($5.3 billion) capital raising, while UniCredit SpA, Italy’s biggest lender, is considering its own stock offering.

Crises have become routine in a nation that’s been ruled by more than 60 governments since World War II. While Britain’s decision to quit the European Union and the election of Donald Trump as the next U.S. president shattered expectations, investors have been girding for Italians to thumb their noses at their own establishment for some time. Shares in the nation’s top 12 banks have tumbled about 8 percent on average in the last three months, compared with a 6 percent jump in the Euro Stoxx Banks Index.

To continue reading please click link https://www.bloomberg.com/news/articles/2016-12-02/italian-banks-flirt-with-disaster-again-as-government-teeters