Italy’s vote is for uncertainty but not for crisis 4 Dec 2016 Matteo Renzi resigned as prime minister after losing his constitutional reform referendum. The immediate challenge facing his successor is to make sure banks in need of capital still get it. Longer term, Italy will hobble on without the change-minded strong government it needs.
Europe’s long weekend presents a triple threat 1 Dec 2016 In the space of just 48 hours Italy's premier will face a make-or-break referendum, Austria could elect a far-right president, and Greek debt talks will reach a head. All three have the potential to revive the centrifugal forces that could send Europe spinning out of control.
Italian assets too sanguine on referendum risks 29 Nov 2016 Bruised Italian markets are clawing back some losses even though Prime Minister Matteo Renzi risks losing a constitutional referendum. Rejection would usher in a period of weak government. The rebound is premature and shows markets' struggle to prepare for extreme outcomes.
Generali’s cost cuts could go further 23 Nov 2016 Under pressure from low rates and Italian political risk, the insurer wants to boost operating performance. Boss Philippe Donnet is right to slash expenses to help do so. Yet hitting Generali's cost of equity implies cutting more than what is currently planned.
Enel finds safety in disruption 22 Nov 2016 The Italian energy producer faces waning demand and tough competition. So it is trying to cut costs and attract customers by spending 4.7 bln euros on digitising the grid. That may be more than just jargon. Enel’s undemanding valuation at least gives it room to experiment.
Mediobanca ploughs lonely but fertile furrow 17 Nov 2016 The one-time puppeteer of corporate Italy wants to bulk up in wealth and asset management. Mediobanca is thriving, but it is also small. If boss Alberto Nagel’s latest strategy works then its potential endgame - to sell out to a bigger player - will get easier.
MPS waves big carrot, fuzzy stick for debt swap 15 Nov 2016 The Italian bank needs to convert creditors' bonds into shares to make a 5-bln-euro capital increase work. It is offering better terms than expected, but keeping vague how many investors must agree. That makes sense given many bonds are held by retail, and the deal's complexity.
UniCredit’s investment case does not involve M&A 14 Nov 2016 In return for enabling a 13-bln euro cash call, the Italian bank's investors would no doubt like a spicier outlook than a spot of cost-cutting and lower bad debts. A rumoured tie-up with SocGen, or bits of it, would help. Trouble is, regulators are miles from helping it happen.
Breakdown: Is Renzi next on liberal elite bonfire? 11 Nov 2016 After the U.S. election, Italy’s upcoming referendum is looking like the next anti-establishment conflagration. A “no” may topple Prime Minister Matteo Renzi, boost support for the anti-establishment 5-Star Movement, and leave both Italy and Europe weaker.
MPS’ best bet is faulty Plan A 1 Nov 2016 The troubled Italian lender rebuffed a rescue plan from banker Corrado Passera, who says the board obstructed his efforts. With the clock ticking, MPS had good reason to stick with its current rescue plan. Yet Passera’s criticisms are valid.
Europe pushes Renzi in dangerous direction 26 Oct 2016 The European Commission is questioning Italy's 2017 budget, just ahead of a key referendum. Capitulation might weaken Prime Minister Matteo Renzi, who has little to lose by flouting Europe's rules. If Renzi falls or takes a pugilistic position, Europe is in for bigger battles.
Gucci’s owner develops taste for C-suite churn 25 Oct 2016 A fresh designer and CEO have worked magic at Gucci. Third-quarter sales at the label that makes the bulk of Kering’s operating profit grew 17 pct. Yet having hired four new chiefs and parted with two creative heads in 10 months, the French group risks overworking the formula.
Gutsy MPS turnaround tackles problems it can 25 Oct 2016 Italy’s sickly bank has devised an ambitious scheme to boost profitability and coax investors to back a 5 billion euro recapitalisation. There are some missing details, such as how a debt swap will work, but it’s a valiant turnaround plan. The main risks are outside MPS’ control.
Italy’s flawed hero needs more than Obama backing 19 Oct 2016 Prime Minister Matteo Renzi's reforms have been praised by the outgoing U.S. president. Yet polls suggest he may soon lose an important constitutional referendum. That would be a shame: Renzi has made mistakes, but his reforms are needed, and a divided Italy needs his dynamism.
Italy’s MPS fix is more political than practical 17 Oct 2016 Corrado Passera has made a proposal to rescue Monte dei Paschi di Siena, facing off a 5-billion-euro JPMorgan plan. The ex-Intesa chief's plan may avoid a politically-thorny debt swap, but raises fewer funds. With MPS, the politically expedient is the enemy of the good.
Italy can be bolder with its budget laxity 28 Sep 2016 Rome will delay its deficit goal next year, citing emergency factors like refugees. Brussels may quibble, but Italy needs growth, and a fiscal crunch could hurt Prime Minister Matteo Renzi's chances in a critical referendum. The leeway is too modest and fleeting to ensure either.
UniCredit fire sale need not destroy its returns 27 Sep 2016 The Italian bank is selling its most profitable assets to plug a capital shortfall. New CEO Jean-Pierre Mustier can recoup some lost earnings by cutting costs. Even then, UniCredit's returns might not exceed its cost of equity - but they would be a good bit better.
MPS sub debt trade is only for the bold 22 Sep 2016 Monte dei Paschi di Siena needs bondholders to swap their debt into shares to make a 5 billion euro rescue viable. That will require arm-twisting, and bold assumptions on the bank’s profitability. There are less stressful ways to trade Italy’s biggest bank rescue.
Tech giants don’t grow on European soil 16 Sep 2016 The region hasn't produced its own answers to tech disruptors like Facebook and Alibaba. That leaves the EU open to accusations of sour grapes when foreign companies like Apple are targeted for unpaid taxes. Regulation and fragmented markets explain Europe's failure to launch.
MPS rescue needs more than a fresh face 9 Sep 2016 The Italian bank's chief Fabrizio Viola is resigning ahead of a 5 bln euro recapitalisation. A new head may be better placed to lead what will be MPS's third rights issue. There's another daunting task: devise a credible business plan, and carry off a tricky debt swap.