For the umpteenth time, Italian banks suffered a selling wave on Tuesday that has inevitably slammed their stock value by an average 3% in just a few hours.
Analysts reckon that the main reason for such a financial tsunami is linked to the macro/sovereign debt environment as well as the ongoing economic crisis.
But hedge fund managers in New York and London add that the strategic decision to continue to support the government by buying domestic bonds in recent months, when it was clear that other European countries were facing massive difficulties, is now turning into a disaster for those banks.
Intesa Sanpaolo and UniCredit, Italy’s two largest banks, have a total exposure to Italian government bonds worth around €97 billion and according to Citigroup analysts both banks have the highest percentage of those bonds in their trading books and didn’t face huge haircuts during the recent round of stress tests.
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Lack of growth, higher costs of funding and costs for loans and mortgages are the main reasons of concern among top managers of Italian banks these days and are seen as triggers of a possible meltdown in banking operations in coming quarters.
Intesa Sanpaolo and UniCredit are both to report quarterly results this week. The others will report at the end of August when the government is expected to resume bond auctions.
http://blogs.wsj.com/source/2011/08/02/italian-banks-get-a-hammering-again/
Analysts reckon that the main reason for such a financial tsunami is linked to the macro/sovereign debt environment as well as the ongoing economic crisis.
But hedge fund managers in New York and London add that the strategic decision to continue to support the government by buying domestic bonds in recent months, when it was clear that other European countries were facing massive difficulties, is now turning into a disaster for those banks.
Intesa Sanpaolo and UniCredit, Italy’s two largest banks, have a total exposure to Italian government bonds worth around €97 billion and according to Citigroup analysts both banks have the highest percentage of those bonds in their trading books and didn’t face huge haircuts during the recent round of stress tests.
...
Lack of growth, higher costs of funding and costs for loans and mortgages are the main reasons of concern among top managers of Italian banks these days and are seen as triggers of a possible meltdown in banking operations in coming quarters.
Intesa Sanpaolo and UniCredit are both to report quarterly results this week. The others will report at the end of August when the government is expected to resume bond auctions.
http://blogs.wsj.com/source/2011/08/02/italian-banks-get-a-hammering-again/
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