Menu Close

Italy’s Banca Monte dei Paschi di Siena’s Stock Price Down 99.7% Since May 2007 (Massive And Growing Non-performing Loans)

This is a syndicated repost published with the permission of Confounded Interest. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

Bloomberg had an interest piece on the EU’s inflexible bank rules regarding Italian banks. 

Italy’s non-performing loans at over 20 percent of GDP and the country’s public debt at over 130 percent of GDP, Prime Minister Matteo Renzi is running out of time. An EU-approved plan earlier this year to restructure the banks through the state-backed rescue fund Atlante has stalled. With only 4.25 billion euros ($4.8 billion), against 360 billion euros of troubled loans, the rescue fund always looked too small; it has failed to attract sufficient private money. Should Italian depositors lose confidence in their banks, still a very real possibility, the chaos would not only risk a financial collapse in Italy, but would spread through the euro zone.  Shares in troubled lender Banca Monte dei Paschi di Siena is down 20 percent this week, with Italy’s La Stampa newspaper reporting Tuesday that  the government is considering a new rescue plan.  

Renzi would like to aid the banks without forcing investors to share losses — politically explosive, given that 45 percent of bank debt is held by ordinary Italians — but European Union state aid rules prevent that. He requested a six-month waiver of EU rules that require investors to be “bailed-in” for state aid to be given except in exceptional circumstances.

Yes, Italy’s Banca Monte dei Paschi di Siena is down 20% this week and, brace yourself, 99.7% since May 2007. As I have said before, many EU banks have never recovered from the credit bubble of the 2000s and the resulting financial crisis of 2008/2009.

montepr

One reason? Mounting non-performing loans which began in 2007 and have nothing to do with Brexit.

montepashilosses

Other Italian banks have mounting bad loans, but Paschi is the leader.

itamonte

So, when discussing the impact of Brexit on bank stocks, it is important to realize that EU bank stocks were crushed by the financial crisis and never recovered.

You see, Central Banks are merrily blowing asset bubbles, like in the UK, which can pop when turmoil and fear become rampant.  Such as Brexit.

nareitukofficw

 

Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RSS
Follow by Email
LinkedIn
Share

Discover more from The Wall Street Examiner

Subscribe now to keep reading and get access to the full archive.

Continue reading