Italy

Telecom Italia’s new boss needs some quick wins

18 January 2019

The Italian telco’s shares have dived after a profit warning. New CEO Luigi Gubitosi can stop the rot by listing its fixed network, but that path is slow and uncertain. A quicker route to credibility lies in selling stakes in choice assets like Inwit and the Brazil business.

Italian banks have a 38 bln euro problem

15 January 2019

The European Central Bank has told euro zone lenders to deal with dud loans by a set date. For state-owned Monte dei Paschi, the deadline is 2026. If applied broadly that demand – and a slowing economy – would hinder Italian banks’ ability to deliver decent medium-term returns.

Germany may outdo Italy as a bank bail-in wrecker

9 January 2019

NordLB needs at least 1.2 billion euros to help provision dud loans after merger talks with rivals failed. Along with smaller Italian peer Carige, the regional German lender is a prime candidate for resolution. Politics means a mix of private equity and public funds is a likelier solution.

Italy’s radicals bow to bank bailout temptation

8 January 2019

The government has passed measures to prop up Banca Carige, despite pledges by some of its members not to rescue lenders. Carige is too small to undermine Italy’s financial sector. But even supposedly anti-establishment parties won’t stomach the political cost of a bank failure.

Italy’s Carige has tricky path to recovery

4 January 2019

The sickly lender won’t find a buyer unless it carries out a serious spring clean. That means selling at least 1.8 bln euros of dud loans, which looks hard without some government aid. The hit to public finances would be small, but a rescue could still stoke political tensions.

ECB starts new year with Italian bank hangover

2 January 2019

Regulators in Frankfurt have appointed temporary administrators at troubled Banca Carige. The unprecedented move looks a last-ditch attempt to push through a 400 million euro cash call opposed by the bank’s top investor. Barring a sale, the next step could be resolution.

Italy’s woes could spell LVMH moment for Moncler

2 January 2019

Italian luxury brands have so far resisted becoming conglomerates like the French behemoth and rival Kering. But generational shifts by founders, combined with an aversion to political risk by global investors, may afford Moncler boss Remo Ruffini his opportunity to change that.

Weed, China, guns and money lead most-read stories

27 December 2018

We promised 2018 would bring “Froth and Frustration,” and that’s just what readers got. Other topics that piqued your interest: Rising populism in Italy, Brazil and France; Broadcom’s doomed bid for Qualcomm and the sale of Refinitiv by Breakingviews’ parent. Plus, fake meat.

Italian banks to bear populism’s burden next year

21 December 2018

Despite being stronger, lenders face another choppy ride in 2019. A strong League showing in the EU parliament will embolden leader Matteo Salvini to seek fresh elections, rekindling Quitaly risk. Breakingviews imagines a WhatsApp chat between a U.S. investor and Italian dealer.

Italy’s budget truce may yet herald 2019 hangover

19 December 2018

Rome’s anti-austerity executive has ended a damaging EU row by backing down over its deficit, cheering domestic asset prices. But its restraint looks largely cosmetic. Investors may soon fret about the risk of a recession and how to refinance public debt without much ECB support.

UniCredit’s next obstacles mostly out of its hands

18 December 2018

CEO Jean Pierre Mustier successfully defused a dispute on capital by fund Caius. Addressing other challenges will be harder. Politics is chiefly responsible for threats in Italy and Turkey to the bank’s capital base. Trying to boost revenues in Germany could be a clearer focus.

Viewsroom: French misery gives Italy some company

13 December 2018

President Macron hopes a 10 bln euro splurge from state coffers will mollify rioters calling him the “president of the rich.” But it’ll worsen the country’s deficit, risking an EU rebuke. It may, though, offer cover for Italy, whose debt load is causing friction with Brussels.

Italy saves EU budget battle for another day

13 December 2018

Spooked by hostile markets, Rome’s anti-austerity government is offering to cut its 2019 budget deficit goal. The U-turn could help avoid EU fines. But if the new targets are achieved by simply delaying promised freebies, tensions with the EU and investors may return next year.

Telecom Italia stuck in activist feedback loop

11 December 2018

Top investor Vivendi wants to overhaul the Italian telco’s board months after a coup by rival Elliott. Regaining control looks hard and Elliott would remain a thorn in the French group’s side. Unless the two find common ground, a governance discount will weight on TIM shares.

EU gives Mediobanca Christmas gift on Generali

5 December 2018

Finance ministers extended until 2024 a generous capital treatment for banks’ stakes in insurers. It allows Mediobanca, which has 13 pct of Generali, to add 100 bps to its capital ratio and delay a sale. CEO Alberto Nagel has a larger buffer to resist market jitters, or do deals.

Pimco makes Christmas turkey out of UniCredit

28 November 2018

The Italian lender is raising $3 billion from the bond giant at nearly 8 pct, miles more than it would have cost earlier this year. UniCredit’s plight is analogous to a last-gasp Christmas turkey shopper. Having delayed until the last moment, it now has to pay through the nose.

Italian budget climbdown would be just a start

26 November 2018

The anti-austerity government may trim its 2019 budget deficit target to defuse a clash with the European Commission. That would ease financial market tensions which risked undermining any benefits of extra spending. The stimulus is still being spent in the wrong places, though.

Italian savers send Rome a warning on debt

21 November 2018

Private investors are shunning an issue of sovereign bonds reserved for them. Lacklustre interest in the “BTP Italia” undermines hopes that households will replace fleeing foreign buyers. It’s also a first sign of domestic discontent over Italy’s budget clash with the EU.

Telecom Italia’s new boss faces old challenges

19 November 2018

Luigi Gubitosi has replaced Amos Genish as head of the Italian telco. With backing from activist investor Elliott, he will try to engineer a complex network breakup and sell assets. But bitter opposition from 24 pct shareholder Vivendi will make the strategy hard to execute.

Europe can play a waiting game with Italian rebels

16 November 2018

Italy’s anti-austerity budget flouts Brussels’ fiscal rules. Declaring Rome in breach and imposing penalties would fuel euro scepticism ahead of key European elections. Better to tone down the rhetoric, and let a slowing economy and hostile markets weaken the executive’s hand.