If you would like to discuss another topic, look for a relevant article. But the shares of other Italian banks fell as investors focused on the scale of their mountain of bad loans.
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This much was evident from the caning taken by bank shares across Europe on Monday, when investors had the opportunity to pass judgment on the findings of the European Banking Authority, which were published after markets closed for business on Friday night.
The six banks that fell into both camps were Allied Irish Bank, Bank of Ireland, Barclays, Commerzbank, Monte dei Paschi di Siena and Raiffeisen Landesbanken.
Indeed, the bank moved before the stress-test announcement to quell fears of its demise, by announcing a plan to raise additional capital, and to move €9.2 billion worth of non-performing loans (€27.7 bn of gross loans, discounted to 33% of book value) off its balance-sheet into a special-purpose vehicle.
With Italy ranking as the third-largest eurozone economy, any crisis of confidence over the state’s financial health has the potential to rekindle concerns about the overall currency’s integrity.
Founded by order of the Magistrature of the Republic of Siena as Monte di Pietà in 1472, when its statute was approved, Banca Monte has been in operation without interruption to the present day.it is considered to be the oldest bank in the world still operating.
The board is expected to approve the capital increase in the fall with the deal expected to conclude by the end of the year. That means our results are key pieces of information that should be considered in the context of each bank’s specific situation,”the EBA chairman said”.
“We think this transaction can give an upside to shareholders”, he said.
Deutsche Bank’s CET1 ratio would fall to 7.8%, below the 8% preference, but there will still be some relief that the outcome was not even worse.
Barclays, Deutsche Bank and Societe Generale fared less well than many of their rivals in a European stress test of their health, showing the pain of being designated a global systemically important bank, or G-SIB.
Despite the stringent nature of the exercise and the heavy tensions of recent years, four of the five Italian banks featured in the EBA sample has showed good resilience, Bank of Italy commented after publication of the results.
The European Banking Authority’s test showed Sweden’s banks to be the most resilient but found the two Irish banks had the weakest capital in the test.
Even before the plan was finalised, BMPS’s stock rose over 10 percent, as it was seen as a welcome alternative to drastic restructuring measures demanded by the European Central Bank.
As a result, the main indexes in Europe were sharply lower, with Germany’s DAX down 1.4 percent and France’s CAC-40 falling 1.6 percent.
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The EBA said the scenario remained valid following Britain’s vote last month to leave the European Union since its tests were with worse growth figures that the worst-case Brexit scenario.
