Tag Archives: Italy

Italian Banks Hammered; Bad Loans Hit €201 Billion; End of Draghi PUT; Get Out Now! by Mike Mish Shedlock

Posted on January 19, 2016 | Leave a comment

From Mike Mish Shedlock at davidstockmanscontracorner.com:

Italian Banks Hammered

Things don’t matter until they do. For whatever reason, things in Europe are starting to matter. For example, Bloomberg reports Italian Banks Lead European Decliners on Bad-Loan Concerns.

Italian banks dropped in Milan, leading declines in the European Stoxx 600 Banks Index, reflecting investor concerns about lenders’ levels of bad debt as the European Central Bank seeks to toughen scrutiny of the region’s non-performing loans.

Banca Monte dei Paschi di Siena SpA, bailed out twice since 2009, slumped 15 percent to 76.6 cents in Milan, a fresh record low. Unione di Banche Italiane SpA fell 7.3 percent, while Banco Popolare SC declined 6.7 percent. Europe’s 46-member Stoxx 600 Banks Index decreased 1.9 percent to the lowest since November 2012, bringing losses this year to 15 percent.

Italian banks’ bad loans reached a record high of 201 billion euros ($219 billion) in November, with record-low interest rates and a struggling economy squeezing profit margins. The ECB’s Single Supervisory Mechanism is seeking additional information about lenders’ non-performing loans in order to tackle bad debt across the region, a spokesman said, confirming a Sunday report by Reuters.

“A task force on non-performing loans is reviewing the situation of institutions with high levels of NPLs and will propose follow-up actions,” the central bank said.

In Italy, the government has been struggling to win approval for a bad bank to help speed up disposals of soured loans. Tensions between the country and the European Commission mounted earlier this month when Juncker publicly questioned Renzi’s criticism over an alleged lack of flexibility.

Italian market regulator Consob imposed a ban on short selling of Monte dei Paschi’s stock for the remainder of Monday’s session through Jan. 19, in an attempt to stabilize shares of the world’s oldest bank, which have dropped about 34 percent this year.

Subordinated and senior bonds in troubled banks including Monte dei Paschi, Banca Popolare di Vicenza and Veneto Banca have slumped to record lows this month. Monte Paschi’s 379 million euros of 5.6 percent junior notes fell more than 10 cents to 71.7 cents on Monday, surpassing the previous record low of November 2011.

To continue reading: Italian Banks Hammered

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Posted in Business, Collapse, Debt, Economics, Economy, Governments

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Population Deflation——–Spain, Germany, Italy Got It, by Mike Mish Shedlock

Posted on December 7, 2015 | Leave a comment

From Mike Mish Shedlock at davidstockmanscontracorner.com:

On the demographic front things are not looking so good for the eurozone.

With declining birth rates and the aging of the population, Mario Draghi will struggle to produce inflation in a population deflationary environment.

Spanish Birthrate Plummets

Please consider Spain Dying as its Birthrate Plummets.

Spain’s population will fall by more than five million over the next 50 years, according to a forecast that raises the prospect of even more “ghost villages” around the country.

In the first six months of this year, Spain recorded 225,924 deaths and 206,656 births, the national statistics institute reported. The country has not seen deaths exceed births consistently since the civil war, from 1936 to 1939, and before that the 1918 Spanish flu pandemic.

Time for Spain to Address its Plummeting birth rate?

The English version El Pais asks Is it time for Spain to address its plummeting birth rate?

Figures from the National Statistics Institute (INS) show there was a peak in 1944, with 23 births per 1,000 inhabitants. But that number bottomed out in 1998 when only nine births per 1,000 were reported.

“We have seen an incredible decline in the birth rate, which has been cut by half since 1975, and this trend is here to stay,” says Andrés, of the University of Palencia.

But for Julio Vinuesa, a demographer at Madrid’s Autónoma University, the study doesn’t provide any new information, but simply reiterates the fact that there has been “a drop” in Spanish birth rates.

“We are witnessing a rapid decline in births and it seems that nobody cares. In the short term it is a relief because it means less spending for families and for the state, and nobody is complaining because no one stops to think about the future consequences,” he says.

British economist Paul Wallace, author of Agequake, which investigates the causes and effects of population aging, has argued that the major investment for any society must be in its own replacement. In this case, Spain has failed.

For the past 10 years, Vinuesa has been pushing for “policies to encourage fertility.” But no one has listened to him.

Meanwhile, the plunge continues.

To continue reading: Population Deflation—Spain, Germany, Italy got It

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Another Eurozone Accident Waiting To Happen—Italian Banks’ Nonperforming Loans Hit New Highs, by Peter Tenebrarum

Posted on July 15, 2015 | Leave a comment

Troubles, troubles everywhere. Yesterday it was Spain, Japan, and Greece; today its Italy. From Peter Tenebrarum at davidstockmanscontracorner.com:

The real danger to the euro area probably doesn’t emanate from Greece, but from two of its heavyweights, namely France and Italy. A small note in the European press reminds us that all is not well in at least one of these countries, least of all with its banks (currently this is only a “page 16 story”, but it has great potential to eventually move to the front page).

The note reads as follows:

“Rome – because of the recession of recent years and corporate bankruptcies, the total of bad loans has continued to rise in Italy. According to Italy’s banking association ABI, non-performing loans amounted to 193.7 billion euro in May, 25.1 billion more than in the same month in 2014. This is the highest level since 1996.

Non-performing loans represent 10.1 percent of all loans granted by Italian banks, ABI said on Tuesday. Especially small and medium enterprises continue to be under pressure due to bad loans, so will take a long time before banks will see the bad loan situation ease, the ABI report stated. Italian companies are currently struggling with the effects of the longest economic crisis since World War II and are therefore often no longer able to service their loans.”

(emphasis added)

If our calculator can be trusted, this means that bad loans in Italy’s banking system have increased by roughly 14.9% over just the past year – by no means a peak crisis year, although Italy’s listing economy continued to contract slightly.

To continue reading: Another Eurozone Accident Waiting to Happen

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Greece Fallout: Italy & Spain Have Funded A Massive Backdoor Bailout Of French Banks, by Benn Stell and Dinah Walker

Posted on July 7, 2015 | Leave a comment

From Benn Stell and Dinah Walker, at The Council on Foreign Relations, via zerohedge.com:

In March 2010, two months before the announcement of the first Greek bailout, European banks had €134 billion worth of claims on Greece. French banks, as shown in the right-hand figure below, had by far the largest exposure: €52 billion – this was 1.6 times that of Germany, eleven times that of Italy, and sixty-two times that of Spain.

The €110 billion of loans provided to Greece by the IMF and Eurozone in May 2010 enabled Greece to avoid default on its obligations to these banks. In the absence of such loans, France would have been forced into a massive bailout of its banking system. Instead, French banks were able virtually to eliminate their exposure to Greece by selling bonds, allowing bonds to mature, and taking partial write-offs in 2012. The bailout effectively mutualized much of their exposure within the Eurozone.

The impact of this backdoor bailout of French banks is being felt now, with Greece on the precipice of an historic default. Whereas in March 2010 about 40% of total European lending to Greece was via French banks, today only 0.6% is. Governments have filled the breach, but not in proportion to their banks’ exposure in 2010. Rather, it is in proportion to their paid-up capital at the ECB – which in France’s case is only 20%.

In consequence, France has actually managed to reduce its total Greek exposure – sovereign and bank – by €8 billion, as seen in the main figure above. In contrast, Italy, which had virtually no exposure to Greece in 2010 now has a massive one: €39 billion. Total German exposure is up by a similar amount – €35 billion. Spain has also seen its exposure rocket from nearly nothing in 2009 to €25 billion today.

In short, France has managed to use the Greek bailout to offload €8 billion in junk debt onto its neighbors and burden them with tens of billions more in debt they could have avoided had Greece simply been allowed to default in 2010. The upshot is that Italy and Spain are much closer to financial crisis today than they should be.

http://www.zerohedge.com/news/2015-07-06/greece-fallout-italy-and-spain-have-funded-massive-backdoor-bailout-french-banks

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They Said That? 5/21/15

Posted on May 21, 2015 | 1 comment

A new Renaissance may be right around the corner. From the movie The Third Man (1949):

In Italy, for thirty years under the Borgias, they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace—and what did they produce? The cuckoo clock.

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Posted in Culture, History

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