Italy

Monte dei Paschi di Siena has been at the centre of discussions about a possible new bank investment fund in Italy, after the lender’s huge bad loan problem came to the fore once again this week.

Melrose Industries, the UK company that aims to buy, improve and sell underperforming industrial businesses, will conduct a heavily dilutive £1.655bn rights issue, cheering equity capital markets bankers who had feared months of weak activity, especially in the UK, after the shock of the Brexit referendum.

Unrated Italian health and beauty product maker Artsana has allocated the loan funding for its 60% stake acquisition by Investindustrial, with pricing unaffected by the Brexit vote.

Pier Carlo Padoan, Italy’s finance minister, who has had his days full dealing with the stress in the country’s banking system, has still not officially announced whether Italy will proceed with the IPO of Enav, the country’s air traffic control system.

The latest Obbligazioni Bancarie Garantite issued by Monte dei Paschi di Siena (MPS) was barely changed on Monday after the bank’s share price sank to new record lows in the wake of news that the European Central Bank had requested a sale of its non-performing loan (NPL) stock.

At the height of the Brexit turmoil this week, another issue emerged as an important and perhaps more pressing concern: Italy is in the midst of a banking crisis. If the country cannot come up with a private solution, or convince authorities to bend EU state aid rules, up to €250bn of retail senior debt will be on the hook, writes Tyler Davies.

UniCredit’s appointment of a new CEO on Thursday raises the prospect that a rights issue for the bank could be the centrepiece of an equity capital market in the autumn that is likely to be at best subdued, after the UK’s shock vote last week to leave the European Union.

The IPO of Enav, the Italian air traffic control system, is progressing steadily, despite the shock of the UK’s decision to leave the European Union, which has sent share prices whizzing in all directions.

A stronger picture is emerging for the eurozone periphery late in the week, after the region’s governments suffered a spike in yields in the immediate aftermath of the UK’s vote to leave the European Union.

Jean-Pierre Mustier is set for a triumphant return to UniCredit less than 18 months after stepping down as head of its corporate and investment bank, as the Italian lender appointed the Frenchman as its new chief executive following a specially-convened board meeting on June 30.

Italy took advantage of a fall in its yields since a Brexit-induced spike late last week to print five year debt at a record low rate on Thursday, while Portugal announced plans for an exchange offer.

Italy could soon inject much needed capital into its banking sector, but the new measures, planned in the wake of the UK's vote to leave the EU last week, must first get past EU state aid and bail-in laws.