Italy

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.

Equity-linked bond bankers are looking forward to a lively year for issuance in Emea in 2017, as they believe market conditions will favour the product and a wide variety of issuers will find it useful.

Italy and the wider eurozone periphery this week rode out the latest vote against the political status quo of 2016, as government bonds performed well despite the resignation of Italy’s prime minister Matteo Renzi after losing a constitutional reform referendum over the weekend.

Options trading picked up this week as the Italian referendum and European Central Bank meeting drove markets. But with few obvious catalysts for upset left in 2016 after these events, the focus is turning to the financials sector as the year’s last bastion of volatility.

Banca Monte dei Paschi di Siena has asked the European Central Bank to extend its rescue plan deadline into next year, in a move that could complicate the commitments the Italian lender received in its debt-for-equity swap.

Banca Monte dei Paschi’s shares climbed 11% on Wednesday, on growing hopes that a way will be found for the Italian state to strengthen its balance sheet, enabling it to achieve a €5bn capital raising demanded by the European Central Bank and avoid a bail-in.