Italy

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.

CEO exit will escalate Telecom Italia brawl

13 November 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 November 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 November 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.

UniCredit’s dividend hopes start to fade

8 November 2018

Italy’s top bank by assets used a relatively strong third-quarter performance to do some kitchen sinking, with an 850 mln euro impairment on its Turkish assets. Yet it was also forced to lower its guidance on solvency. A pleasant dividend surprise next year looks less likely.

Intesa’s gold star now comes with ECB glitter

6 November 2018

Italy’s biggest lender by value’s nine-month net profit is its best since 2008, despite a domestic bonds selloff. Solvency is also higher than required by Intesa’s Frankfurt regulator even after a stress test. That makes it the only Italian commercial bank with dividend headroom.

Ferrari boss’s cautious driving has merit

5 November 2018

Investors punished new CEO Louis Camilleri in August for calling his predecessor’s targets "aspirational". Ferrari’s rising EBITDA margin arguably warrants a more stringent target. Yet trade war fears and volatile Chinese regulation mean Camilleri is right to exercise caution.

Hitachi clinches honourable Italy truce with Singer

29 October 2018

The Japanese giant is paying 12.7 euros a share to Elliott and others to buy out rail-signal group Ansaldo. After a two-year saga, the activist’s boss Paul Singer has secured a better deal. But Hitachi’s scope for further deals in a changing rail sector means it also gains.

Mediobanca is lender of choice for rare Italy bulls

25 October 2018

The Milan bank is proving almost immune to a domestic bond market rout and has few bad loans. Hence it can probably take market share from battered Italian peers. For those few bank investors who are Italy enthusiasts, a lowly valuation makes Mediobanca the sanest way to buy in.

Gucci owner is unreliable beacon for luxury sector

24 October 2018

Kering’s upbeat view on Chinese demand sparked a rally in high-end stocks. But the group has so far been less vulnerable to economic swings than rivals thanks to its social media savvy. And the outlook for spending may be less rosy if China’s consumer confidence is any guide.