Banks take a beating on Milan bourse

Index slides below 18,000 points as MPS suspended

(ANSA) - Milan, January 18 - The Milan stock exchange continued losing ground Monday as investors sold their bank shares on concern over delays in the setting up of a so-called bad bank to absorb toxic loans.
    Also weighing on Italian and European markets were Brent crude prices, which slid to 2003 lows of under $28 a barrel as the lifting of sanctions against Iran means the Islamic Republic can start exporting again.
    European investors also expressed fears of a continued Asian economic slowdown ahead of China GDP numbers out Tuesday, and the closure of Wall Street as the United States celebrates Dr. Martin Luther King Day did not help matters, analysts said.
    In Milan, the FTSE Mib index shed 2.65% at under 19,000 points by the close.
    Banks took a hit and Monte dei Paschi di Siena (MPS) was suspended after plunging to a historic low of 0.76 euros a share (-15.1%).
    It ended up 14.8% down on the day. This means the bank is worth 2.2 billion euros after it obtained a capital increase of three billion euros last summer.
    In comparison, UniCredit (-18% since the beginning of the year) has market cap of 25 billion euros and Intesa Sanpaolo of 45 billion euros. MPS share prices have lost 50% since the end of October and 38% since the last trading day of 2015.
    Investors shunned the Siena-based bank on fears it won't be able to get rid of its non-performing loans.
    The lender announced on December 28 that it is selling one billion euros' worth of toxic loans to Epicuro SpV, owned by Deutsche Bank.
    MPS said the operation is part of its plan to transfer 5.5 billion euros in receivables under its 2015-2018 industrial plan.
    MPS CEO Fabrizio Viola on Monday downplayed the 14.8% bourse fall, saying the Tuscan lender was "stable" and focused on getting better results on non-performing loans (NPLs). "We confirm the economic and financial stability of the Bank, highlighted by the results of the (European Banking Authority's Supervisory Review and Evaluation Process) SREP and the improvement in operating management as shown by the results achieved in the first nine months of 2015," he said. "The share price's drop occurred without any management issues apt to justify such progress," Viola said.
    "With reference to the management and sale of NPLs," he said, "we are concentrating (on this) in particular in order to obtain results that are even better than the (Business) Plan".
    Also suspended were Banco Popolare, Bper, Carige, and UBI bank.
    They continued losing ground after trading resumed, with Bper (-8.67%), Banco Popolare (-6.7%) and UBI (-7.3%), BPM (-5.5%), Intesa Sanpaolo (-5%) and UniCredit (-5.4%) by the close of trading. Bucking the trend were Luxottica (+0.6%), STM (+1.7%), and Telecom steady after Vivendi increased its stake to about 21.4%.
    Elsewhere in Europe, markets opened up, plunged mid-morning, then recovered to trade flat.
    European bourses closed with marginal falls, with London 0.42% off, Frankfurt down 0.25% and Paris 0.49% off.


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