Italy’s radicals bow to bank bailout temptation 8 Jan 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 Jan 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 Jan 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 Jan 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 Dec 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 Dec 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 Dec 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 Dec 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 Dec 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 Dec 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 Dec 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 Dec 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 Nov 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 Nov 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 Nov 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 Nov 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 Nov 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.
CEO exit will escalate Telecom Italia brawl 13 Nov 2018 The board’s decision to sack Amos Genish reflects heightened tensions between activist Elliott and top shareholder Vivendi over the Italian telco’s future. Their next battle will be over the mooted breakup of the group. With competition at home, the timing could hardly be worse.
Italian group bank rescue is self-preservation act 12 Nov 2018 A vehicle funded by the country’s lenders is spearheading a 400 mln euro rescue plan for ailing Carige. A private sector bailout avoids using taxpayers’ money and should not clash with EU state aid rules. It’s a sensible way to minimise the risk of banking contagion.
Writedown speeds reckoning for Telecom Italia boss 9 Nov 2018 A 2 bln euro goodwill charge dragged the Italian telco into the red in the third quarter, overshadowing a resilient operating performance. The group will also bust a debt target. The row between investors Vivendi and Elliott looks increasingly likely to force out CEO Amos Genish.