This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.theguardian.com/business/2016/dec/05/monte-dei-paschi-shares-fall-italian-referendum-result
The article has changed 7 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Monte dei Paschi shares fall after Italian referendum result | |
| (about 1 hour later) | |
| Shares in the world’s oldest bank – Banca Monte dei Paschi di Siena – have fallen after Italian voters rejected constitutional changes and plunged the government into crisis. | Shares in the world’s oldest bank – Banca Monte dei Paschi di Siena – have fallen after Italian voters rejected constitutional changes and plunged the government into crisis. |
| Investors in MPS, which was founded in 1472, fear the resignation of Matteo Renzi as prime minister will affect attempts to clinch a €5bn (£4.2bn) lifeline from investors by the end of the year. The shares plunged 10% before recovering some losses. They were trading 3% lower at about midday in London. | Investors in MPS, which was founded in 1472, fear the resignation of Matteo Renzi as prime minister will affect attempts to clinch a €5bn (£4.2bn) lifeline from investors by the end of the year. The shares plunged 10% before recovering some losses. They were trading 3% lower at about midday in London. |
| Concerns about MPS were raised during the stress tests on the sector by the European Banking Authority in July, when the bank was ranked as the weakest of the 51 European institutions subjected to the annual assessment. | Concerns about MPS were raised during the stress tests on the sector by the European Banking Authority in July, when the bank was ranked as the weakest of the 51 European institutions subjected to the annual assessment. |
| A consortium led by the Wall Street bank JP Morgan is reportedly meeting to discuss the fundraising. There have also been reports that MSP bank officials are to meet representatives from the Qatar Investment Authority – the gulf state’s sovereign wealth fund – to try to secure backing. | A consortium led by the Wall Street bank JP Morgan is reportedly meeting to discuss the fundraising. There have also been reports that MSP bank officials are to meet representatives from the Qatar Investment Authority – the gulf state’s sovereign wealth fund – to try to secure backing. |
| Even so, there are expectations that the Italian government will need to prop up the bank, despite new EU rules which prevent state aid unless bondholders have been forced to take losses. | Even so, there are expectations that the Italian government will need to prop up the bank, despite new EU rules which prevent state aid unless bondholders have been forced to take losses. |
| Alberto Chiandetti, a manager at the Fidelity European Opportunities and Fidelity Funds Italy investment funds, said: “The focus is on whether an anchor investor will materialise or not. If not, Monte Paschi needs a plan B and in that scenario, bank shares are likely to suffer most. We should know [on Monday] whether such an anchor investor exists for Monte Paschi.” | Alberto Chiandetti, a manager at the Fidelity European Opportunities and Fidelity Funds Italy investment funds, said: “The focus is on whether an anchor investor will materialise or not. If not, Monte Paschi needs a plan B and in that scenario, bank shares are likely to suffer most. We should know [on Monday] whether such an anchor investor exists for Monte Paschi.” |
| The prospects of a capital injection for MPS being found entirely from private investors appeared to be receding, analysts said. “I think a precautionary recapitalisation is ultimately still probable as a private sector-only solution is now highly unlikely to work,” said Mujtaba Rahman, managing director of Eurasia Group. | The prospects of a capital injection for MPS being found entirely from private investors appeared to be receding, analysts said. “I think a precautionary recapitalisation is ultimately still probable as a private sector-only solution is now highly unlikely to work,” said Mujtaba Rahman, managing director of Eurasia Group. |
| Renzi had said he would resign if the referendum on constitutional changes, held on Sunday, was rejected. About 59.1% of Italians voted against the proposed changes in a move that has prompted fears about the future of the European project. | Renzi had said he would resign if the referendum on constitutional changes, held on Sunday, was rejected. About 59.1% of Italians voted against the proposed changes in a move that has prompted fears about the future of the European project. |
| Renzi has been credited with helping to create a backstop fund – known as Atlante – for a banking industry that has €360bn of bad debts and is highly fragmented with more than 500 lenders. | Renzi has been credited with helping to create a backstop fund – known as Atlante – for a banking industry that has €360bn of bad debts and is highly fragmented with more than 500 lenders. |
| Technically, the state can intervene only once bondholders – which in the case of Italy would include savers - have taken losses. However, in uncertain circumstances the government can step in. There are also suggestions that a compensation scheme could be set up for retail bondholders forced to take losses. | Technically, the state can intervene only once bondholders – which in the case of Italy would include savers - have taken losses. However, in uncertain circumstances the government can step in. There are also suggestions that a compensation scheme could be set up for retail bondholders forced to take losses. |
| The Dutch finance minister, Jeroen Dijsselbloem, arriving in Brussels for a meeting of the Eurogroup of finance ministers, played down the need for immediate state intervention. | The Dutch finance minister, Jeroen Dijsselbloem, arriving in Brussels for a meeting of the Eurogroup of finance ministers, played down the need for immediate state intervention. |
| “Italy is a large economy, one of the largest in Europe, it has strong institutions. You can see that market reaction so far has been moderate,” said Dijsselbloem | “Italy is a large economy, one of the largest in Europe, it has strong institutions. You can see that market reaction so far has been moderate,” said Dijsselbloem |
| With the immediate focus on MPS, the markets are also looking to next week when Italy’s largest bank, UniCredit, is scheduled to meet investors in London to discuss its strategy. The meeting on 13 December has prompted speculation it is readying a multibillion-euro cash call. UniCredit was ranked fifth weakest in the European bank stress tests. | With the immediate focus on MPS, the markets are also looking to next week when Italy’s largest bank, UniCredit, is scheduled to meet investors in London to discuss its strategy. The meeting on 13 December has prompted speculation it is readying a multibillion-euro cash call. UniCredit was ranked fifth weakest in the European bank stress tests. |
| Chiandetti said: “Currently rumoured to be around €10bn-€13bn, the amount should be disclosed at the UniCredit capital market day. A difficult environment for Italian banks will no doubt weigh on this upcoming deal and put pressure on UniCredit shares.” | Chiandetti said: “Currently rumoured to be around €10bn-€13bn, the amount should be disclosed at the UniCredit capital market day. A difficult environment for Italian banks will no doubt weigh on this upcoming deal and put pressure on UniCredit shares.” |