Four questions Monte dei Paschi must answer 23 Jan 2013 The Italian bank is probing how opaque derivatives trades racked up hundreds of millions of euros in losses. It has promised to come clean about how it got into the mess. Investors and taxpayers need transparency on what it was doing, why it was doing it, and why they weren’t told.
Generali’s radical words not yet echoed by deeds 14 Jan 2013 Italy’s biggest insurer is seeking 4 bln euros more capital by 2015 via selling assets. New CEO Mario Greco is rightly trying to move Generali away from its Italian power-broking past. But a really radical move would have been a sale of non-core stakes and a rights issue now.
Italian elections are complicated – and important 9 Jan 2013 February’s vote could determine Italy’s future, and affect broader euro zone policy. The country’s convoluted electoral system and unsettled political environment make a stable outcome far from certain.
EU drops the ball on Monte dei Paschi bailout 28 Dec 2012 The 3.9 bln euro recapitalisation of Italy’s third largest bank had looked likely to punish Monte’s foolhardy equity investors. Instead, the European Commission has let them off the hook. That hurts Italian taxpayers and dilutes important single market principles.
Monti tries to rise above political fray 24 Dec 2012 Italian outgoing premier Mario Monti has published a manifesto but isn’t backing any party in next year’s election. The move falls short of the engagement some had expected. But it may win broader backing for his reforms, and pressure the main parties to embrace his agenda.
GE’s $4 bln swoop on Italian supplier is shrewd 21 Dec 2012 The U.S. conglomerate will buy aerospace components maker Avio for $4.3 bln, or 8.5 times EBITDA. GE simplifies its supply chain, grows in the booming civil aviation market, and should reap savings. After a bumpy ride, Avio’s private-equity owners also reap a solid return.
Latam minority investors strike back against Enel 21 Dec 2012 The Italian utility tried to foist overvalued assets onto shareholders of Enersis, its Chilean unit, as part of an $8 bln capital hike. Minorities rebelled and with regulatory help forced Enel to restructure the deal. It’s a small but significant victory for Latam shareholders.
Derivatives fraud ruling crosses a line 20 Dec 2012 UBS and Deutsche are among banks found guilty of fraud over derivatives sold to Milan. The verdict is likely to be tested by an appeal. But for now, it overrides banks’ usual defence that sophisticated clients know what they are getting into. And it could affect many other deals.
A new star in Italian politics: "lo spread" 12 Dec 2012 Silvio Berlusconi has dismissed bond yields as a German conspiracy. His rant is wrong. High spreads hurt his own dire electoral chances by reminding Italians of his calamitous record. For once, euro zone policymakers and speculators find themselves curiously aligned.
Monti exit shows Italy still needs market pressure 10 Dec 2012 The Italian premier says he will resign, having lost the support from Silvio Berlusconi’s party. This will accelerate next year’s scheduled elections. Renewed political disarray after a year of stability will do little to reassure markets. That may not be such a bad thing.
Hugo Dixon: Bersani may not be bad for Italy 3 Dec 2012 Investors want Mario Monti to stay as PM after the election, which will probably be in March. But they are more likely to get Pier Luigi Bersani, leader of the left-wing Democratic Party. There are risks, but such an outcome may not be as bad as it looks.
Monte dei Paschi finds patriotism doesn’t pay 23 Nov 2012 The venerable Italian bank hoped to receive state bailout cash without much dilution for existing investors. But Brussels looks likely to nip this in the bud. Banks in the euro zone periphery will think twice before loading up on public debt to help their struggling governments.
Fiat Industrial unearths more value in CNH tie-up 20 Nov 2012 The Italian tractor maker’s no-premium merger bid for 88 pct-owned unit CNH was rightly rebuffed by a committee of the U.S. company’s board. FI is back with a 26 pct cash bump. The bidder’s not above some arm-twisting too. But this looks more like a fair squeeze-out premium.
Hugo Dixon: Is Hollande more like Rajoy or Monti? 19 Nov 2012 In other words, is France’s president condemned to be always behind the curve with reform like Spain’s PM? Or can he get ahead of it like Italy’s PM? Hollande started off like Rajoy. But he is finally talking sense. What’s not clear is if he has the courage to keep it up.
Naguib Sawiris shakes up stagnant Telecom Italia 12 Nov 2012 The Egyptian mobile tycoon wants back into Italian telecoms. Investing in TI would be a Carlos Slim-style bet on low valuations and an old-world telco’s turnaround potential. The target’s top shareholders may balk. But the miserable status quo at TI is unlikely to hold.
Intesa creditors can’t complain that fair is foul 5 Nov 2012 Bondholders are irked that the Italian bank flouted the convention that it call subordinated debt at the first opportunity. But they must accept that banks don’t honour calls when it’s not in their interest. And as more break rank, that behaviour is becoming the new normal.
Can Spain, Italy keep their bailouts on the shelf? 31 Oct 2012 The mere threat of ECB bond buying has lowered yields for Spain and Italy. Markets are still under the spell and investors are scared to sell. Rome won’t burn if it declines a bailout, but Madrid should bite the bullet.
Berlusconi sentence a mark of Italy in transition 26 Oct 2012 The 76-year-old former prime minister was convicted of tax fraud and sentenced to four years in prison. That is a defeat for Il Cavaliere’s cavalier approach to business and politics. But appeals will drag on, and the country is still without a functioning modern democracy.
Draghi keeps barbarians at Italy’s gate 18 Oct 2012 Some euro zone officials worry that markets could push Rome into a bailout after Madrid requests one. That’s unlikely. ECB bond buying of Spanish debt will benefit Italy too. But as long as that country’s political weaknesses persist, the barbarians will not decamp.
Italy to keep Monti, in name or spirit 11 Oct 2012 Mario Monti has hinted he may stay on beyond next year’s elections. If he doesn’t, a new government may pursue his policies anyway. But the worst case scenario - government paralysis, or a stalemate on reform - is still possible, and would trigger a bailout.