Monte dei Paschi

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.

As Banco Espírito Santo (BES) creditors await compensation after a bridge bank was established to bring forward the collapsed lender’s healthy assets, retail investors are increasingly being granted extra protection in cases of bank failure in Europe.

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.

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.

The market has been preoccupied with the European Banking Authority’s 2016 stress tests results, but really there has been little to look forward to. The tests don’t go far enough to say anything meaningful about the state of European banking.

Monte dei Paschi di Siena’s share price fell 8% on Monday morning, ahead of the European Banking Authority’s 2016 stress test results.

Monte dei Paschi di Siena could be left with a capital shortfall of €4bn if it completes a sale of non-performing loans to Fondo Atlante.

Monte dei Paschi di Siena (MPS) has become a symbol of Italy’s banking woes, but a private sector salve will not end the lender’s non-performing loan (NPL) problem. A poor performance in the European Banking Authority’s (EBA) 2016 stress tests will only hammer home the size of the mountain left to climb, writes Tyler Davies.

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.

Atlante could reach out to more potential investors after being forced to underwrite all of Banca Popolare di Vicenza’s recent IPO, but the future of larger banks remains subject to the success of structural reforms.

Monte dei Paschi di Siena is beyond the help of Fondo Atlante, according to an ECB official, but new reforms could help the bank tackle its mountain of non-performing loans.