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Sofferenze loans – literally, 'the suffering' – make up 60% of Italy’s non-performing loan stock. At €200 billion, that’s some 11% of the country’s GDP. Fears about the fate of Europe’s fourth-largest economy as its banking sector stands on the brink have centred around the world’s oldest bank – Monte dei Paschi di Siena. The European Central Bank has had Monte’s feet to the fire to clean up its balance sheet. But, surrounded in Malebolge-like cliffs of bad debt of about €50 billion and having burned through €8 billion of freshly raised capital before, plans to get the bank out of the eighth circle of hell have been fraught with problems. Euromoney has collected its best features from recent months covering the Italian loan problem. Together, they represent a thorough and fascinating look into the Italian banking crisis.
Italian banks a bigger risk than Turkey
August 2018
Analysts warn Italy will be a bigger shock to Europe than anything Turkey has to offer, as potential crises go.
'Don’t overestimate' Italy risk, pleads Amundi’s Perrier
August 2018
Italy flows up despite populists’ impact on bond yields; warns of peak debt across the West.
How the banking union fell into an Italian abyss
May 2018
Despite the latest attempts to stymie them, Eurosceptic populists remain the most powerful political force in Italy – largely thanks to anger at a banking crisis, often fanned by the ECB. Now their approach to power is killing the last chance of fixing the banking union, and possibly the euro.
SC Lowy makes bet on Italy’s banking system
May 2018
Firm buys Credito di Romagna stake; European banking licence adds to appeal.
Italy’s debt problem still a huge risk
February 2018
The elections will deliver a new government, but the old challenges remain.
February 2018
Investors can support their local lenders by preparing to sell them.
Italy banking: How Carige beat the clock
February 2018
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Banca Carige pulled off a recapitalization last December that even chief executive Paolo Fiorentino thought difficult. It raised more than four times its market cap, just ahead of an ECB deadline. Euromoney asks how he did it and how the bank can reward its investors.
January 2018
Discussions about European NPLs are essentially discussions about Italian NPLs.
Alternative awards of the year 2017
December 2017
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Survivor of the year/‘How’s he still in a job’ award? Bank of Italy governor Ignazio Visco
UniCredit: No end to Mustier's tests
December 2017
With progress made on profitability, the chief executive is turning to deep-seated organizational challenges
ECB piles more pressure on Italian mid-tier
November 2017
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Western Europe: European banking’s behind-the-scenes activist
November 2017
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An investment fund focused on banks with a slant on Europe and Italy might sound like a recipe for disaster, but Davide Serra of Algebris tells a story of market-beating returns and snowballing AuM, and thinks the best times lie ahead.
Bank resolution: The exception does not always prove the rule
September 2017
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Nearly every time Europe’s Bank Recovery and Resolution Directive is called into play, there seems to be a new justification for using public money.
Banking: Throwing the bail-in out with the bath water
September 2017
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A textbook case, a long-inevitable state bailout and a brazen political fudge: Europe’s BRRD has had something of a rough ride this summer. As the region’s banks brace themselves for the capital-raising marathon that is MREL, are the new resolution regulations actually doing more harm than good?
Italy is still Europe’s main political tail-risk
August 2017
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Europe’s investor prospects are superficially safer due to economic recovery, but elections in Germany and in Italy, especially, present tail-risks. This is a manifestation of deeper uncertainty urging a fresh approach to risk management.
UniCredit: Mustier’s magical year
August 2017
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As a self-described ‘insider-outsider’, Jean Pierre Mustier’s return to UniCredit has transformed the image of Italy’s biggest bank – inside and out – over an extraordinary 12 months as CEO.
Italy rescue fund manager hits back at critics
July 2017
Firm behind Atlante rubbishes private offers for Veneto banks; freed funds for MPS deal a ‘coincidence’.
Taxpayers bail out Italian banks
June 2017
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Just two weeks after Banco Popular’s rescue was hailed as a triumph of Europe’s post-crisis resolution regulation in action, Italian taxpayers are footing the €17 billion bill for the collapse of two long-troubled lenders. Maybe that post-crisis regulation isn’t quite as effective as it is supposed to be.
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Western Europe: Europe’s banks leave the emergency ward
May 2017
The ECB’s inflation outlook in March gave hope that, after a year in intensive care, European banks are recovering. There is a sense that Basel risk-weighting rules pose less of an immediate danger, while peak regulation has passed. Is European banking cured or only in remission?
Country risk: Italy is the volcano waiting to erupt
April 2017
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An improving eurozone economy is failing to provide investors with encouragement about Italy’s prospects as it comes back into focus after the French elections.
Consolidation is coming, says UBI Banca CEO
March 2017
As UBI Banca prepares a new capital raising linked to its purchase of three rescued banks, CEO Victor Massiah says his bank and others can do more to build economies of scale through mergers.
Banking: Italy’s top table turns
March 2017
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As UniCredit goes from zero to hero, is Intesa taking the opposite route?
Banking: Europe’s battle to fix the ‘doom loop’
March 2017
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Breaking the sovereign/bank nexus has been a priority for policymakers since the global financial crisis. The problem is particularly acute in Europe. One proposal, to end the preferential capital treatment for the sovereign exposures of banks, may presage a revolution in European capital markets. But getting Europe’s rival factions to agree on a policy is far from simple.
European NPLs: Think global, act local
February 2017
Setting up a European bad bank is a dauntingly complicated and time-consuming proposition. Europe’s NPL problem needs to be tackled at the national level.
UniCredit breaches cap ratios after Q4 charges
February 2017
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Bank warns on AT1 coupon if €13 bln rights issue fails; move highlights importance of capital increase.
EBA’s Enria says Europe-wide bad bank is essential to avoid Japan-style stagnation
February 2017
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Italy alone accounts for 26% of the total, but nearly 80% of all European bad debt is held in six countries.
Western Europe: Portugal bank risk spikes as Italy turns corner
January 2017
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Italy could be clawing itself out of a pit of worry about its banks, according to the latest Euromoney Bank Risk results.
No pressure! UniCredit warns it could struggle to pay AT1 coupon if rights issue fails
January 2017
As EGM approves capital increase, lender spells out impact on regulatory capital if things go wrong.
Mustier makes his mark on UniCredit
January 2017
UniCredit CEO Jean-Pierre Mustier has unveiled his new strategic plan for the bank. At its heart is a €13 billion rights issue. But look deeper and Mustier is at pains to stress UniCredit’s European, rather than Italian, credentials. He’ll need to convince shareholders that this time the bank has a real prospect of breaking free of the country’s bad debt troubles.
Italy banking: The ever-recurring nightmare of bailout
January 2017
It is time European regulators proposed a BRRD that is fit for purpose.
Huge rights issue at heart of Mustier’s new plan for UniCredit
December 2016
UniCredit CEO Jean-Pierre Mustier has unveiled his new strategic plan for the bank. With a €13 billion rights issue at its centre, he will need to convince shareholders that this time the bank has a real prospect of breaking free of the country's banking troubles.
UniCredit shakes off Italy tag with NPL fire sale
December 2016
The bank hopes a deal to offload bad debts to Fortress and Pimco will show investors that it is putting its NPL issues behind it
MPS and state aid: Hope, or a slippery slope?
December 2016
Reports of a government plan to buy subordinated bonds and convert them into shares in Monte dei Paschi di Siena suggest that a state-backed rescue is now inevitable.
Inside Italy's circle of NPL hell
September 2016
The bad-debt crisis killing some of Italy's biggest banks looks likely to get worse before it gets any better. That has frightening implications, not just for the country, but for the rest of Europe as well. In the following features, Louise Bowman and Dominic O'Neill investigate the options left to political and financial leaders from Rome to Frankfurt, and reveal the depth of the problems they face in Italy's bad-debt heartlands.
Italian shock might blow a hole in stronger Piigs risk profile
November 2016
Investor prospects in Portugal, Ireland, Spain and even Greece have brightened this year, but Italy could still put a damper on the recovery.
Italian banking: MPS mayhem returns
October 2016
The Italian lender’s revised capital plan prompted its share price to plunge 39% in a matter of hours. Time is running out for a capital raise by year-end.
Italy’s rising risk is warning of an existential eurozone shock
October 2016
Its risk score plunged the most of any country worldwide in Euromoney’s country risk survey in Q3 2016, highlighting how eurozone investors must remain on their toes.
Italy: New MPS chief unveils debt swap as Viola exits
October 2016
Former BAML and JPM banker takes over troubled bank; share-price fall seen scuppering €5 billion rights issue.
Inside Italy’s bad-debt heartlands
September 2016
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Italian banks have allowed non-performing loans to swell to such numbers that they are now a central concern for the European and global financial system. Delving into Italy’s bad-debt suggests the problem might be even worse than public figures show. Can the country turn it all round – even if it has the time to do so?
September 2016
Every proposed scheme for sorting out Italy’s bad debt problems has its own shortcomings. And that’s before taking into account the fact that those problems could get worse. Pressure from the ECB is fanning the flames of the crisis. Fixing legacy problems could now require dramatic action.
Italy: ECB’s first merger brings more worry
September 2016
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The ECB’s demand for a €1 billion capital increase in the banking union’s first big merger between Banco Popolare and BPM has dowsed hopes for a slew of similar deals that might add value to banks that desperately need it.
Bank capital: Italy worries mask wider malaise in Europe
September 2016
Benign scenarios used by EBA; CCAR reveals greater capital shortfalls.
Structural problems and underperforming economy the biggest threat to Italy
August 2016
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The Italian banking sector suffered a spanking in the European Banking Authority’s stress tests last week, but the banking system is not the only issue for the sovereign. Italy’s risk score could drop further this year if the government does not gain a mandate to carry out much-needed reforms.
Italian banking: Squaring the circle
August 2016
Italy’s banks cannot deal with their NPLs unless they have capital, but they are not being allowed to recapitalize until they have dealt with their NPLs.
Bank capital: MPS secures 11th hour rescue plan
August 2016
ECB demands MPS shed €10 billion loans; last minute private deal scrambled.
Europe’s bank stability is in question, say country risk experts
July 2016
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Country-by-country assessments of Europe’s banking sector show that risks are at new highs, as the financial services industry struggles to cope with the aftershocks of the 2007/08 crisis. Resolving the Italian bank crisis is key to how it will all pan out.
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Jean-Pierre Mustier to re-set purpose and direction at UniCredit
July 2016
While the accelerated sales of stakes in Fineco and Pekao signal a new style, UniCredit's returning CEO says HVB still fits with the core Italian business.
Country Awards for Excellence 2016: Italy
July 2016
It has been a torrid year in Italian banking. The third-biggest bank searched in vain for a merger partner, consolidation among cooperatives went round in circles, a bad-debt scheme flopped, and big problems at little banks threatened to topple the whole system. Finally, as Euromoney goes to press, the country’s biggest bank is rudderless.
June 2016
Under a new CEO, investors in Italy’s biggest bank need to see shock and awe.
Italy banking: Atlas wrestles critics over size
May 2016
Bank backstop fund competes with private equity; doubters say it should be four times bigger.
Italy banking: Inside Cassa Depositi e Prestiti
April 2016
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State-backed Cassa Depositi e Prestiti's (CDP) mission to jumpstart the Italian economy has been met with scepticism. CEO Fabio Gallia tells Euromoney why he is convinced it will succeed, while fears over Italy's NPL conundrum and bank-restructuring saga refuse to abate.
Italy banking merger: Beginning or end?
April 2016
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Mixed regulatory messages cloud the outlook after Italy’s first big bank merger since 2008.
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The big wobble: Can the SSM stabilize Europe's banking system?
April 2016
The Single Supervisory Mechanism, the eurozone’s new banking supervisor, is tasked with combating financial fragmentation, building a banking union and, above all, making Europe’s banks investable once again. The first few months of its tenure were some of the most difficult since the dark days of the euro crisis. Bankers’ scepticism about the new regime is the least of their worries.
SSM: Banks brace for punishment on credit risk, sovereign debt
April 2016
Apart from standardizing the numerator for banks’ solvency ratio (capital), the eurozone and the Basel Committee on Banking Supervision are going to analyse and, where necessary, harmonise the denominator (risk-weighted assets).
Country risk: Why Italy is a safer bet than Spain
February 2016
Delve into the details of their respective economic and political prospects, and Italy’s investor credentials are seemingly more favourable than Spain’s.
Italy: Rome fiddles as banks burn
February 2016
State bad debt scheme to chip not chop; BCC reform could create top-three lender.
MPS securitization beats bad debt, bail-in rout
February 2016
Troubled Tuscan lender taps new funding; ABS benefits from ‘safe haven’ status.
EU banking union ushers in new era
February 2016
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Bail-in uncertainties remain; Portugal and Italy mark tough start for BRRD.
February 2016
Europe’s plan for a bad bank in Italy, it turns out, is to not have a bad bank at all.
Western Europe: UniCredit strategy review prompts drastic cuts
December 2015
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Italy, Austria, Germany take brunt of 18,000 job losses; lingering capital doubts overshadow efficiency drive.
Bank consolidation: Europe’s missing link
December 2015
The need for European bank consolidation is clear. Southern European banks are numerous small and poorly valued. But the good news is that consolidation is getting under way in Italy and the Iberian peninsula – particularly Spain. Bank M&A could accelerate, if and when regulatory uncertainty clears.
Inside the race for Italy's NPLs
November 2015
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International investors are scrambling to establish themselves as the country’s huge NPL market finally starts to creak open. But this is not a market for the faint-hearted, and achieving those double-digit rates of return will require skill and unrivalled local knowledge.
Italian banks rejig top brass as stocks stagnate
November 2015
CFO leaves MPS for UniCredit after new chairman arrives; lack of buyers stymies M&A.
October 2015
After years of crisis, a quiet revolution is happening in Italian banking. A mountain of bad debt and a government and regulator intent on reform have ended a fundamental tenet of the cooperative system – with implications for the vast tracts of cooperative banking elsewhere in Europe. Will the reform and a wave of mergers succeed in bringing Italian capitalism out of the regions and into the 21st century?
Italy banking: Popolari identity crisis
October 2015
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The onslaught of regulatory change and capital requirements is putting pressure on co-operative ownership of banks across Europe, but especially in Italy.
Against the tide: Is Italy turning?
September 2015
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Renzi’s reforms and favourable winds seem to be working some magic on the country’s numbers.
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Europe’s new national banking champions
September 2015
For European banks, the days when a lack of big international operations was seen as a weakness are gone. Nowadays, some of the continent’s biggest and most successful banks are using large market shares in a single market in increasingly profitable ways – setting an example for bigger peers. Euromoney asks their CEOs how they are doing it.
Western Europe: Wealth managers unlock Italian digital banking
September 2015
Fineco share price shoots up; rivals set up similar businesses.
Banking in Italy: Economies of scale
July 2015
Only structural change, not tweaks, will bring a recovery across Italy’s banking sector.