UniCredit saga shows EU banks’ strange new world 25 Jan 2012 Despite a rocky start, the Italian bank’s 7.5 billion euro rights issue looks to be on course. The European Central Bank has eliminated worries about short-term funding. But a full recovery will come when UniCredit can issue plentiful senior unsecured debt. That’s not close.
Italy needs markets to keep pressure up 24 Jan 2012 Mario Monti’s liberalisation reforms are already producing a backlash from vested interests. Opposition will be even tougher when he tackles labour rules. Eventually, Italy needs lower bond yields. But for now, 6 percent yields are needed to scare Italians into backing change.
Ethical economy: Cruising with too much haste 18 Jan 2012 The cruise industry demonstrates much of what works well in the industrial economy. But the shipwreck of the Costa Concordia shows some of the weaknesses. Marketing and building come easily, but the creation of a culture of safety is a challenge, especially when growth is fast.
Unipol’s latest empire-building looks a stretch 18 Jan 2012 The Italian insurer’s attempted takeover of BNL in 2006 was a fiasco. An ambitious four-way merger to create a rival to Generali makes greater financial and commercial sense. But the plan still requires jittery shareholders to support a huge capital hike.
Austria’s problem is more Ireland than Italy 16 Jan 2012 S&P’s downgrade of the country’s AAA rating does not reflect problems in the economy. The current account is in surplus and deficit and debt levels moderate. But Austria’s banks peddled unsound foreign currency mortgages at home and abroad. The country is paying the price.
UniCredit’s glum backers have crumbs of comfort 11 Jan 2012 Underwriters committed to acquiring unwanted shares in the Italian bank’s 7.5 billion euro rights issue watched last week’s slump with alarm. Despite a brief rally, the offering could yet end up in their laps. But while that would be financially embarrassing, it’s not a disaster.
Hungary’s choice: disaster or surrender 10 Jan 2012 Budapest needs financial aid from the IMF and EU after its populist policies scared away investors. A swift deal would calm fears of contagion to Austria and central Europe. But international lenders can only agree if the government repeals its most outrageous reforms.
Santander’s capital hike shows value of self-help 9 Jan 2012 The Spanish lender has met EU demands for a 15 bln euro capital boost six months early. Bigger bad loan provisions and extra buffers for systemic banks mean it is not yet in the clear. But with rival UniCredit’s rights issue under pressure, avoiding a big cash call is a distinct advantage.
Fiat may find Chrysler deal is ticket out of Italy 5 Jan 2012 The Turin carmaker will spend 2012 working out how to acquire the rest of the Detroit firm after raising its stake to 58.5 pct. Depending on the structure, Fiat may become Italy’s first truly global multinational - but only if the Agnelli family puts pragmatism over sentimentality.
UniCredit cash call scariest for other euro banks 4 Jan 2012 The Italian lender’s shares slumped after pricing its 7.5 bln euro rights issue at a predictably steep discount. But UniCredit will get its cash. If the selloff persists, those sweating will be the underwriters who are on the hook – and rival banks planning similar cash calls.
Rome’s funding pain eases, but is not cured 28 Dec 2011 Italy’s funding costs halved in auctions on Dec. 28, as its bond market started to behave a bit more normally. Cheap ECB funds may have helped, as well as Rome’s new commitment to austerity. But while Italy has taken one step back from the abyss, it still faces huge hurdles.
Italy’s fate still in lap of the euro Gods 5 Dec 2011 Mario Monti’s plan includes a welcome crackdown on “baby” pensions and a property tax. Labour reform is also promised soon. There’s no silver bullet to cut Rome’s 120 percent debt/GDP ratio, but Monti has probably done enough to get help from the Gods: Merkozy and Draghi.
Monte dei Paschi’s independence looks shaky 2 Dec 2011 The foundation that controls half the ancient Italian lender’s shares is struggling to pay off its debts. But Monte dei Paschi also needs yet more capital. The bank may be able to shrink its balance sheet. If it fails, it may have to find a merger partner or seek state support.
Euro IMF scheme raises four questions 1 Dec 2011 The latest wheeze for solving the crisis is for national central banks to lend money to the IMF which will then pass it to Italy and possibly Spain. But how much money will be available, who will provide it, where will they get it or who will bear the risk?
Italy, Spain may be best off with fast trip to IMF 28 Nov 2011 If market confidence can’t be restored rapidly, Monti and Rajoy – the countries’ new PMs – should consider asking for help while they can still blame their predecessors. The snag is the IMF doesn’t have enough cash. So its resources would need beefing up, probably by the ECB.
Italy shakes off the Berlusconi stigma 24 Nov 2011 Angela Merkel and Nicolas Sarkozy will treat Mario Monti, conspicuously, as an equal at their three-way meeting today. The days when Italy was shunned because of its shady leadership are past. The rehabilitation will help Monti at home, as he pushes through difficult reforms.
Finmeccanica is threat and opportunity for Italy 22 Nov 2011 A long-running corruption investigation into the defence firm has flared up, engulfing executives and politicians. A scandal could be a spur for needed business reform. But for now, the fragile consensus government may not be helped by a corporate crisis with political fallout.
Timing is key for Super Mario’s Italian rebirth 17 Nov 2011 Anyone hoping Mario Monti’s maiden speech would be a game-changer will be disappointed; there were no big numbers for taxes or privatisations. Still, Monti’s reforms go in the right direction, and he has popular support for the challenges ahead. He must use it quickly.
Berlusconi’s loss could be Murdoch’s gain in TV 17 Nov 2011 Rupert Murdoch is the most obvious business beneficiary if Silvio Berlusconi’s stranglehold on Italian media loosens. Reform of the sector is badly needed, if some way off. That could ultimately lure new players, such as Germany’s Bertelsmann.
UniCredit’s capital hike is a wager on Europe 14 Nov 2011 Given market nerves, the Italian lender’s plan to raise half its market cap from shareholders looks bold. For investors who have hung on this long, pumping in 7.5 bln euros is a bet that Italy can avoid disaster. But UniCredit’s deleveraging plan shows the broader economic risks.