Italy

The key to the clean-up and recapitalization of Italy’s Banca Monte dei Paschi di Siena is a €5bn rights issue but even though a strong cast of top tier ECM banks have signed on to run it, the deal still hinges on finding real demand. Aidan Gregory and Owen Sanderson report.

Intesa Sanpaolo beat analysts’ earnings expectations for the second quarter and came out shining in last week’s stress tests. Though its pile of non-performing loans is still growing, the bank has escaped the asset quality and capital adequacy fears that dog Italy’s other large banks.

Despite recording strong year on year increases to net income in the second quarter, UniCredit's corporate and investment bank attracted little attention on Wednesday. Instead new chief executive Jean Pierre Mustier spent time taking questions on the group's plans to raise capital, stress tests and non-performing loans.

Shares in Banca Monte dei Paschi di Siena, have fallen by as much as 17% since the bank unveiled plans for its rescue on Friday, which include a €5bn rights issue.

BayernLB successfully issued a $300m Pfandbrief at a tighter spread than it could have achieved in euros. It follows a privately placed sterling Obbligazioni Bancarie Garantite (OBG) issued by Banca Popolare dell'Emilia Romagna (BPER).

Banca Monte dei Paschi di Siena will try to raise €5bn of capital by completing its fifth rights issue in eight years by the end of 2016.

Monte dei Paschi di Siena’s last minute non-performing loan fix could bolster spreads on outstanding debt, at the expense of shareholders, while avoiding any bail-in of bondholders.

Jean-Pierre Mustier’s had a busy first month at UniCredit. Already, the new CEO has launched a strategic review, sold 10% each of FinecoBank and Bank Pekao, made a host of senior appointments and scrapped two-year-old talks with Santander about combining their asset management businesses.

Back in July 2010, not long after the first Greek bailout, results of stress tests conducted by the Committee of European Banking Supervisors (the predecessor of the EBA) were released on the EU’s banks. They didn’t make for happy reading.

The downward spiral of euro periphery borrowing costs on Thursday showed no signs of slowing. For the second month in a row, Italy sold five year paper at a record low yield

A strong second quarter performance in fixed income trading has bolstered BNP Paribas’ corporate and investment banking results and helped cushion falls in its equities business and domestic retail banking arm.

UniCredit is considering a possible flotation of its asset management business Pioneer Investments, after talks with Santander about a merger with Santander Asset Management failed.