18 October 2016 by lberuti
Italian banks have been much talked about over the last few sessions. Positive vibes first came during the week-end when Banca Popolare Di Milano and BPIM ( Banca Popolare SC ) won shareholders’ approval for a merger creating Italy’s third largest lender. Today, MONTE’s ( Banca Monte dei Paschi ) board met after asking their CEO to look into a proposal by Mr Passera, Italy’s ex-minister for economic development and former CEO of Intesa Sanpaolo, to shore up its finances. The plan envisions a €5Bln capital increase, which would include a €1Bln share sale to existing shareholders and €2.5Bln from new long terms backers. While volumes traded on peripheral banks are still dwarfed by transactions on DB, these string of positive news enabled them to outperformed their peers recently and they are the brightest green spots in the above grapple.
Meanwhile, the broader credit market also benefitted from the better tone in the financial sector and from a few earnings beats which buoyed the equity market. Until tomorrow night, iTraxx Main and CDXIG could find it difficult to trade significantly away from their current levels (72.5bps and 75bps respectively) as these are important pins for options expiring late in the afternoon.