Govt steps in to save Italian bank-should we be nervous again?

The Field Marshal

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Renowned economist David Mc Williams speaking on RTE this morning referred to a slow bank run in Italy whereby billions have been slowly transferred out of Italian banks.

Now we have the oldest bank in Italy failing to convince private investors to support it any more and the govt has to step in to approve a 20 billion bailout package.

Unlike the Irish situation the bondholders will be burned.

There is even muted talk of Italy becoming another Greece.
Le Pen if elected will re-introduce the french franc the following day.

How much longer can this sort of financial voodoo economics persist in the eurozone and the unequal treatment of EZ members continue?

https://www.ft.com/content/90299b9e-c789-11e6-9043-7e34c07b46ef

Speaking in parliament on Wednesday, Pier Carlo Padoan, Italy’s finance minister, insisted that apart from a few “critical” situations, Italy’s banking system was “solid and healthy”. He vowed to “minimise, if not erase” any impact of the public intervention on the savings of ordinary citizens.

Didnt Ireland have a finance minister talking exactly just like that back in 2008 ?


Are we reaching a tipping point?

Happy Xmas and New Year to everybody.?

Italy's government set to bail out world's oldest bank with last-ditch rescue fund
https://www.theguardian.com/business/2016/dec/21/italys-20bn-bailout-fund-to-rescue-monte-dei-paschi-di-siena
Marine Le Pen vows to 'win back freedom for France' - The Local
 


ruserious

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Bondholders are being burned because they are largely made up of Italian pensioners who have saved all their lives rather than the financial elite in our situation. No way an Italian government would put the banks before the people unlike our sorry lot. Depressing really. Our PRF wiped out, and for what?
 

gerhard dengler

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According to figures released there is €360 billion of bank loans outstanding at Italian banks which are not being repaid. One of the banks within that €360 billion figure is Banca Monte dei Paschi di Siena S.p.A. (BMPS).

The shareholders in Banca Monte dei Paschi di Siena S.p.A. (BMPS) are not willing to invest more money in that bank.

Banca Monte dei Paschi di Siena S.p.A. (BMPS) tried to persuade other shareholders to invest. They did not do so.

Even if the Italian government nationalise Banca Monte dei Paschi di Siena S.p.A. (BMPS), there is no guarantee that it's fate will improve.

The real question is the level of exposure other Italian banks have to Banca Monte dei Paschi di Siena S.p.A. (BMPS).
 

PBP voter

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The Eurozone still has the same fundamental problems of core and periphery.

The snowflakes and cry babies in the Brexit thread tried to shout me down a while back when I mentioned this.
 

GDPR

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There isnt a barge pole long enough.

According to the FT they've had a cash burn of 8 billion over the last 4 years.

They're looking to raise 5 billion, just how long is that expected to last 3, 6, 9, 12 months.

BRRD rules state that a bail-in must take place before there can be a bail-out, it would appear that the Italians have forgotten to read that part of the Directive, I'm pretty certain that the Greeks will remind them though.
 

The Field Marshal

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Bondholders are being burned because they are largely made up of Italian pensioners who have saved all their lives rather than the financial elite in our situation. No way an Italian government would put the banks before the people unlike our sorry lot. Depressing really. Our PRF wiped out, and for what?
But are not these Italian pensioners also people who are going to suffer?
The real concern is what is the actual state of the Italian banking system and is it solvent.

Italy has a gigantic govt debt
The Italian government debt is the public debt owed by the government of Italy to all public and private lenders. As of January 2014, the Italian government debt stands at €2.1 trillion (131.1% of GDP)
https://en.wikipedia.org/wiki/Italian_government_debt.

Btw what is PRF?
 

Jack Walsh

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Why should we be nervous?
If America is thriving, the World in general always does well.
And America is going to be Great, isn't it?
 

sic transit

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But are not these Italian pensioners also people who are going to suffer?
The real concern is what is the actual state of the Italian banking system and is it solvent.

Italy has a gigantic govt debt
The Italian government debt is the public debt owed by the government of Italy to all public and private lenders. As of January 2014, the Italian government debt stands at €2.1 trillion (131.1% of GDP)
https://en.wikipedia.org/wiki/Italian_government_debt.

Btw what is PRF?
The new EU rules mean that bondholders get burned first before any taxpayers money is used. They'll figure out a way to do it now that it's been agreed in principle by parliament. One thing they may well need to do along the way is a NAMA bad bank approach, to flush out the system.

PRF=Pension Reserve Fund
 

blinding

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Have our Politicians suggested that the Irish People will only be too willing to help out with their money Yet...............
 

ruserious

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But are not these Italian pensioners also people who are going to suffer?
The real concern is what is the actual state of the Italian banking system and is it solvent.

Italy has a gigantic govt debt
The Italian government debt is the public debt owed by the government of Italy to all public and private lenders. As of January 2014, the Italian government debt stands at €2.1 trillion (131.1% of GDP)
https://en.wikipedia.org/wiki/Italian_government_debt.

Btw what is PRF?
Pension Reserve Fund.
 

The Field Marshal

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According to figures released there is €360 billion of bank loans outstanding at Italian banks which are not being repaid. One of the banks within that €360 billion figure is Banca Monte dei Paschi di Siena S.p.A. (BMPS).

The shareholders in Banca Monte dei Paschi di Siena S.p.A. (BMPS) are not willing to invest more money in that bank.

Banca Monte dei Paschi di Siena S.p.A. (BMPS) tried to persuade other shareholders to invest. They did not do so.

Even if the Italian government nationalise Banca Monte dei Paschi di Siena S.p.A. (BMPS), there is no guarantee that it's fate will improve.

The real question is the level of exposure other Italian banks have to Banca Monte dei Paschi di Siena S.p.A. (BMPS).
Italy has a debt to gdp ratio of 136% in 2014.
[Im still trying to locate figures as to what it now is].

https://en.wikipedia.org/wiki/Italian_government_debt
In 2010 when it was at 120% Italy ran a budget deficit of 4.6% of GDP in 2010. Italian debt was almost 120% of GDP ($2.4 trillion in 2010). This led investors to view Italian debt bonds as a risky asset.

If Italys debt to gdp ratio is seen as unsustainable and bonds dry up then Italy will join the Greek tragedy
 

The Field Marshal

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Have our Politicians suggested that the Irish People will only be too willing to help out with their money Yet...............
It is the heavily indebted Italian government who are borrowing another 20 billion to bail out this one bank.

The Italian national debt is 2,386,144,416,500 euros and mounting by the second.

Italy Debt Clock :: National Debt of Italy

Can the Italian economy sustain these levels?
 

The Field Marshal

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The Eurozone still has the same fundamental problems of core and periphery.

The snowflakes and cry babies in the Brexit thread tried to shout me down a while back when I mentioned this.
If Italy develops a serious banking problem then its end game for the euro.
 

Mad as Fish

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If Italy develops a serious banking problem then its end game for the euro.
Should that happen then the governments will declare that it's too expensive to issue new notes and it will have to be a cashless society whether we like it or not.

How convenient.
 

GDPR

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Forbes Welcome

Forbes discussing the compulsory "bail-in" which is likely to hit savers and investors before state funds can be used to prop up the failing banks.

So bond-holders and large depositors will start pulling money out of the banks seen at risk.

The EU insisted that the Irish government bail out their banks bond holders. In Italy they are looking to burn the bond holders. Irish bank bonds were held by European banks so they had to be settled. Italian bonds are held mainly by Italian nationals who can be shafted.

Anyone see a pattern here?
 

sic transit

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Forbes Welcome

Forbes discussing the compulsory "bail-in" which is likely to hit savers and investors before state funds can be used to prop up the failing banks.

So bond-holders and large depositors will start pulling money out of the banks seen at risk.

The EU insisted that the Irish government bail out their banks bond holders. In Italy they are looking to burn the bond holders. Irish bank bonds were held by European banks so they had to be settled. Italian bonds are held mainly by Italian nationals who can be shafted.

Anyone see a pattern here?
It's part of the new EU rules. Back in 2009, unfortunately, there were no such rules and the ECB would not let any bank burn bondholders for fear of contagion.
 

The Field Marshal

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