Monte dei Paschi

Banco BPM struggled to build much of an order book behind a new tier two bond this week, with bankers arguing that investors have become more selective with their exposures to southern European names.

A new tier two deal from Italian lender Monte dei Paschi di Siena on Thursday showed that the market is open for trickier credits looking to sell riskier bonds. The deal emerged as the European Central Bank told Monte to raise capital to complete the sale of €8bn of non-performing exposures to Amco, the state-owned asset management company.

Analysts think Intesa Sanpaolo will succeed in winning over UBI Banca’s shareholders after sweetening the terms of its takeover bid. The merger deal is seen as an important test case for consolidation in the Italian banking sector.

The European Banking Authority is urging resolution planners to consider the real impact of Covid-19 on banks. It wants to make sure that resolution can be seen as a "credible" option in times of stress.

BPER Banca said on Monday that it would buy more loans and branches than expected as part of its involvement in a potential tie-up between Intesa Sanpaolo and UBI Banca. The merger process hit a snag last week, but market participants hope that a deal can still be agreed.

Bonds sold by Banca Monte dei Paschi di Siena were surging higher in secondary market trading this week, amid reports that the Italian bank was close to agreeing plans to offload a €10bn portfolio of non-performing loans.

The cost of insuring against default on Italian bank bonds has fallen to its lowest point in over a year, after investors embraced the result of recent regional elections in the country.

Banca Monte dei Paschi di Siena wrapped up its second deal of the month on Tuesday, capping off a busy period for Italian deal flow in advance of important regional elections.

Banca Monte dei Paschi di Siena was marketing a new senior bond in the euro market on Tuesday, a matter of days after it completed its capital raising plan with a tier two sold at 8%.

Italian banks took over the financial institutions bond market this week, enjoying a much lower cost of funding and capital than they have been accustomed to in recent years. The sector will look to make good use of favourable issuance windows in 2020, as it moves inch by inch towards a more positive outlook.

The stars have aligned for Banca Monte dei Paschi di Siena following its rescue by the Italian state. It is hard to see how other banks could be so fortunate.

Banca Monte dei Paschi di Siena was more than two times subscribed for a €400m tier two on Wednesday, as the state-backed Italian lender used strong market conditions to finally complete the last leg of its capital raising plan.