Trading in troubled Italian bank
Monte dei Paschi di Siena (MPS) plunged as much as 16% Thursday
before regaining ground to close down by 7.05% as jittery
investors sold it and other bank stocks amid concern over stress
tests by the European Central Bank.
Trading in shares in MPS, the world's oldest continuously
operating bank, was halted at one point because of volatility,
as shares closed at 0.679 euros after the ECB said it needed to
produce a plan by November 10 for plugging a 2.1 billion euro
capital gap.
Earlier in the day, Italy's Economy Minister Pier Carlo
Padoano said that both MPS and Banca Carige, which also failed
the ECB tests released Sunday, must find "market solutions" to
their capital problems.
Padoan also noted that the ECB stress tests put banks from
across Europe through examinations based on "extreme scenarios"
to assess their stability, and that although nine Italian banks
did not do well in test, seven of those have already made the
necessary changes.
However, the chairman of the European Banking Authority
Andrea Enria told a conference in Berlin that the ECB's stress
tests were not infallible and even those that did well in the
tests might still have other problems, Bloomberg news reported
Thursday.
That hit bank shares hard and pushed down the Milan's FTSE
Mib, which lost 1.41% during the day before closing higher by
0.19% to reach 19,194 points.
Shares in Genoa-based Carige, which has announced plans to
sell assets to help to make up a shortfall of about 810 million
euros identified by the ECB, saw its shares fall by 10.67% to
close at about 0.067 euros.
Italy's largest bank Intesa Sanpaolo fell by 2.22% during
trading but ended the day up by 0.09% to 2.25 euros and Banco
Popolare shed 2.25% to close at 11.28 euros.
Troubled MPS raised some five billion euros in new capital
in early summer in order to repay a State bailout and avoid
nationalization, as well we shoring up reserves ahead of the ECB
assessment.
The bank had received a 4.1-billion-euro bailout approved
under former premier Mario Monti, and had been threatened with
nationalization if it failed to repay the government support.
That came just before the bank was thrown into crisis when
it emerged in January 2013 that a shady series of derivative and
structured-finance deals had produced losses of 720 million
euros.
Since then, MPS has come under the spotlight in relation to
investigations for suspected insider trading and fraud.
MPS has also been at the center of a judicial investigation
into its acquisition of smaller rival Antonveneta in 2008 as
well as the derivatives trades the bank allegedly used to
conceal losses.
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