After the lack of success of private initiatives to help restructure Italy’s banking system, the government is now looking at how it can directly step in and help out the banks. Monte dei Paschi di Siena (MPS) is one of Italy’s biggest banks and the one which has the largest amount of toxic assets on its balance sheet by a long shot. At the end of the first quarter, MPS’ exposure to toxic assets was over 47 billion euros.
UBS | After a few weeks spent focusing on systemic concerns, earnings should offer a chance to go back to fundamentals. We are cautious into results as the recent rally left both banks trading on richer multiples and thus with limited protection against a quarter where underwhelming earnings could lead to consensus downgrades.
The European Banking Authority (EBA) has finished defining the nature of the stress tests, as well as the scenarios the 51 largest European banks will be subject to in 2016. But given the situation of the Italian and German lenders, after the last stress test, there are more and more people who believe there is a certain amount of complicity going on to hide the real situation of many of the banks in both countries.
LONDON | BNP Paribas | Over the years we have abstained from discussing M&A scenarios among Italian banks as we always deemed it highly speculative. However we believe the proposed reform of the Italian Popolari banks (forcing them to demutualise within the next 18 months) changes everything with defensive M&A among small and mid-cap banks a distinct possibility.
MADRID | By Julia Pastor | As expected, ECB’s September TLTRO will not make big headlines. 255 European banks borrowed €82.6bn of liquidity below consensus estimate of €100-150bn. Although the Frankfurt-based institution doesn’t provide a geographical breakdown, banks in Italy and Spain were among the leading borrowers (40% of the total) to trim funding costs. Spanish entities are thought to have asked half of those €30bn at their disposal, although some entities “are not willing to disclose how much they asked for,” an ECB source confirmed to The Corner.
MADRID | The Corner | FOMC’s conclusions (the Fed is renewing its pledge on low rates) meaning little changes to the current rates scenario, the spotlight has shifted to the Scottish independence referendum (final results to be released around 5:30-6:30 GMT on Friday), which is presumably going to have an impact on European financial markets today. Also the ECB is publishing the results of its much-awaited first TLTRO operation today. It’s the most important cheap cash offer from the central lender since the beginning of the economic crisis which has been very popular in Spain and Italy. Spanish banks will aim for €30bn, Economy Minister said on Wednesday.
LONDON | By Barclays analysts | We discuss the Italian economic and financial situation based on data and analysis contained in the November 2013 Bank of Italy Financial Stability Report. Following almost two years of recession in Italy, positive growth should resume in Q4 this year. After a likely 1.8% GDP contraction this year, we forecast a 0.8% expansion in 2014.