Italy

While UniCredit’s CEO has rallied his troops round a simple vision that should be easy to execute, the success of the corporate and investment bank will come down to greater collaboration across countries and divisions, writes David Rothnie.

With the Christmas holidays fast approaching, equity capital markets are demonstrating that the first quarter of 2017 is likely to be busy, with two significant rights issues announced in the past few days.

UniCredit's €13bn rights issue, which won rousing applause from investors on Tuesday when the share price rose 16% on its announcement, will be one of the centrepieces of what is likely to be a busier year for financial institutions ECM in 2017.

UniCredit will not be one of the Basel IV ‘outliers’ that will have to substantially increase its capital levels when the new rules come in, according to chief executive Jean-Pierre Mustier, speaking at the launch of the bank’s new strategic plan on Tuesday morning.

UniCredit announced this evening a set of capital requirements given it by the European Central Bank. Tomorrow it will hold a capital markets day in London at which Jean-Pierre Mustier, who took over as its CEO in July, will announce his strategy, including towards the bank’s capital position.

Amundi’s shares closed at a record high on Monday, up 5.4%, after it announced it would use a €1.4bn rights issue and €600m of senior and subordinated debt to buy Pioneer Investments from UniCredit.

Italy’s new prime minister Paolo Gentiloni has the opportunity to provide a strong boost to Italian bonds if he acts swiftly, according to Pioneer Investments.

Banca Monte dei Paschi di Siena may re-open its debt-for-equity swap for retail investors, as part of a last-ditch attempt to complete its rescue plan and prevent its bondholders suffering losses in a bail-in.

As the path to Banca Monte dei Paschi di Siena’s survival looks increasingly uncertain, it is becoming clear there is a tension at the heart of Europe’s new bank recovery and resolution directive (BRRD). Ordinary people, the group the rules were designed to protect, might be the group they hurt the most. If the authorities show flexibility, MPS could yet become a blueprint for compassionate bail-in, writes Tyler Davies.

Uncertainty surrounds the attempt to recapitalise Banca Monte dei Paschi di Siena, as news media reported today that the European Central Bank had denied its request for an extension of the deadline for it to raise €5bn, until January.

UniCredit turned to the equity-linked bond market on Thursday to dispose of its last 7.4% stake in Bank Pekao, after agreeing to sell 32.8% of the Polish lender to insurance company Powszechny Zakład Ubezpieczeń and the Polish Development Fund, for Z10.6bn (€2.4bn).

Banca Monte dei Paschi, and all involved in attempts to recapitalise it, are waiting for decisions from the European Central Bank, which will determine how its €5bn equity raising proceeds.