Groundhog day in Rome 3 Apr 2013 Italy’s warring politicians keep on failing to agree on how to reform the country and the political system. Neither a lingering recession nor the rise of the anti-establishment 5-Star Movement has concentrated minds. Political stasis has a high cost for the Italian economy.
Italy illustrates reward, and cost, of austerity 21 Mar 2013 Rome raised its deficit target for the next two years. It’s a belated realisation of austerity-induced recession, and a reward from Brussels for towing the line. A country with no government and rising debt might spook markets, but Mario Draghi has sedated the bond vigilantes.
UniCredit benefits from German thawing on Italy 15 Mar 2013 The Italian bank repatriated 1 bln euros more than expected from its German branch. HVB remains over-capitalised due to the Italian jitters of regulator BaFin. In spite of the political mess in Rome, this may be a sign that the banking balkanization of Europe is receding.
Italy’s Tony Blair is best suited to sell reform 15 Mar 2013 Matteo Renzi, the centre-left mayor of Florence, is a serious candidate to run Italy. He is young and voters are sick of old, conflicted leaders. His appeal to right and left could reshuffle the political deck. Italy needs not only reforms, but the right salesman.
Eni’s $4.2 bln gas deal has something for everyone 15 Mar 2013 Offloading 20 percent of a big Mozambique gas field to China’s CNPC cuts the Italian major’s development risk. China gets access to huge new energy supplies, at a price that vindicates Shell’s decision to pass up a more expensive deal last year. Mozambique wins, too.
Enel’s 6 bln euro offload highlights its frailty 13 Mar 2013 Selling a few billion euros of non-core assets will help the heavily indebted Italian utility’s balance sheet. But the disposals may also sap earnings. With grinding austerity and pricing pressure hitting Enel’s core markets, the shares are likely to remain weak.
Moleskine turns over new leaf with ambitious IPO 13 Mar 2013 The maker of sleek black notebooks wants a Milan listing. Scribblers at one bank suggest it might be worth a hefty 515 to 775 mln euros. Strong branding, growth and margins argue for a premium valuation, but not all tales of consumer infatuation end well for investors.
Intesa: nice bank, shame it’s in Italy 12 Mar 2013 The country’s largest retail lender managed a profit in 2012. The good news is strong capital and liquidity; the bad news its exposure to a weak sovereign. Still, if it needs to bolster provisions, Intesa is much better positioned than peers to do so - without raising capital.
ECB faces high-stakes dilemma on SME loan drought 12 Mar 2013 The European Central Bank can’t ignore the dearth of credit for small Spanish and Italian companies: it’s in its own data. Taking credit risk via buying banks’ SME loans would be way out of Mario Draghi’s comfort zone. But if things worsen the ECB may have to take the plunge.
Hugo Dixon: Markets too sanguine about Italy 11 Mar 2013 The country’s politics and the economics are both messed up - and there are no easy solutions. While Rome does have the ECB as a backstop, it may have to get to the brink before using it.
Markets wrong to downplay Italian political risk 5 Mar 2013 Italian bond spreads have risen since the election. But it could have been worse - and considering the possible scenarios, it should. The priority is political reform, so a credible government can emerge at the next election. But even this isn’t assured.
Hugo Dixon: Spain probably won’t catch Italian flu 4 Mar 2013 The risk of Madrid being thrown off its reform path has risen since Italy’s shock election. But Mariano Rajoy doesn’t have to face the voters for nearly three years. What’s more, the Italian vote may even have a silver lining for Spain if it leads to less austerity across Europe.
Bersani-Grillo may find platform to reform Italy 27 Feb 2013 Centre-left leader Pier Luigi Bersani has proposed a way out of the political gridlock, seeking loose support from ex-comedian Beppe Grillo’s party. They could agree on much-needed political reform. At the very least it may limit Silvio Berlusconi’s nuisance potential.
Electoral funk endangers Italian banks’ recovery 26 Feb 2013 The sector has tanked amid renewed political chaos. Most of the big banks had been slowly repairing their capital bases and were accessing market funding. If higher yields push up costs and further hit already-weak returns, the virtuous circle will turn vicious again.
Euro zone must change to allow Italy to reform 26 Feb 2013 The Italian election results caught euro zone leaders by surprise. They now fear “instability”. It’s clear that Italy will pay a high price if it fails to reform. But crude “austerian” meddling by other governments, the EU and the ECB helped create the current mess.
Hugo Dixon: Italy could reignite euro crisis 26 Feb 2013 The disastrous election has echoes of last year’s first inconclusive Greek election - except that Italy is much bigger. The country faces political paralysis, while its economy is shrinking and its debt is rising. The ECB safety net has holes in it and contagion could return.
Germany loses Italian election 25 Feb 2013 Italian voters rejected the euro zone’s prescription of austerity and reform. The centre-left is ahead, but Silvio Berlusconi’s anti-euro coalition is leading in the Senate. Germany’s preferred candidate, Mario Monti, was trounced. Markets should brace for a few chaotic weeks.
Italian elections will produce more of the same 14 Feb 2013 Current Prime Minister Mario Monti’s technocratic regime is unlikely to be followed by a strong, reform-minded government. Whoever forms the next governing coalition, their policies will be constrained by both markets and the ECB.
Ethical economy: Tradition, novelty and the pope 13 Feb 2013 The resignation of Benedict XVI is a Catholic story, but the pope’s willingness to cast aside a well-established tradition - implicitly abandoning a quasi-doctrine - is relevant to all institutions. Corporate bosses could follow his principles by demanding big pay cuts.
Finmeccanica woes show need for radical overhaul 12 Feb 2013 The arrest of Italian defence company chief Giuseppe Orsi for bribery could derail the group’s restructuring and debt-reduction plans. Political intrigue shouldn’t distract the next government from selling down its stake in Italy’s second-biggest employer.