Italy

Santander’s capital hike shows value of self-help

9 Jan 2012

The Spanish lender has met EU demands for a 15 bln euro capital boost six months early. Bigger bad loan provisions and extra buffers for systemic banks mean it is not yet in the clear. But with rival UniCredit’s rights issue under pressure, avoiding a big cash call is a distinct advantage.

Fiat may find Chrysler deal is ticket out of Italy

5 Jan 2012

The Turin carmaker will spend 2012 working out how to acquire the rest of the Detroit firm after raising its stake to 58.5 pct. Depending on the structure, Fiat may become Italy’s first truly global multinational - but only if the Agnelli family puts pragmatism over sentimentality.

UniCredit cash call scariest for other euro banks

4 Jan 2012

The Italian lender’s shares slumped after pricing its 7.5 bln euro rights issue at a predictably steep discount. But UniCredit will get its cash. If the selloff persists, those sweating will be the underwriters who are on the hook – and rival banks planning similar cash calls.

Rome’s funding pain eases, but is not cured

28 Dec 2011

Italy’s funding costs halved in auctions on Dec. 28, as its bond market started to behave a bit more normally. Cheap ECB funds may have helped, as well as Rome’s new commitment to austerity. But while Italy has taken one step back from the abyss, it still faces huge hurdles.

Italy’s fate still in lap of the euro Gods

5 Dec 2011

Mario Monti’s plan includes a welcome crackdown on “baby” pensions and a property tax. Labour reform is also promised soon. There’s no silver bullet to cut Rome’s 120 percent debt/GDP ratio, but Monti has probably done enough to get help from the Gods: Merkozy and Draghi.

Monte dei Paschi’s independence looks shaky

2 Dec 2011

The foundation that controls half the ancient Italian lender’s shares is struggling to pay off its debts. But Monte dei Paschi also needs yet more capital. The bank may be able to shrink its balance sheet. If it fails, it may have to find a merger partner or seek state support.

Euro IMF scheme raises four questions

1 Dec 2011

The latest wheeze for solving the crisis is for national central banks to lend money to the IMF which will then pass it to Italy and possibly Spain. But how much money will be available, who will provide it, where will they get it or who will bear the risk?

Italy, Spain may be best off with fast trip to IMF

28 Nov 2011

If market confidence can’t be restored rapidly, Monti and Rajoy – the countries’ new PMs – should consider asking for help while they can still blame their predecessors. The snag is the IMF doesn’t have enough cash. So its resources would need beefing up, probably by the ECB.

Italy shakes off the Berlusconi stigma

24 Nov 2011

Angela Merkel and Nicolas Sarkozy will treat Mario Monti, conspicuously, as an equal at their three-way meeting today. The days when Italy was shunned because of its shady leadership are past. The rehabilitation will help Monti at home, as he pushes through difficult reforms.

Finmeccanica is threat and opportunity for Italy

22 Nov 2011

A long-running corruption investigation into the defence firm has flared up, engulfing executives and politicians. A scandal could be a spur for needed business reform. But for now, the fragile consensus government may not be helped by a corporate crisis with political fallout.

Timing is key for Super Mario’s Italian rebirth

17 Nov 2011

Anyone hoping Mario Monti’s maiden speech would be a game-changer will be disappointed; there were no big numbers for taxes or privatisations. Still, Monti’s reforms go in the right direction, and he has popular support for the challenges ahead. He must use it quickly.

Berlusconi’s loss could be Murdoch’s gain in TV

17 Nov 2011

Rupert Murdoch is the most obvious business beneficiary if Silvio Berlusconi’s stranglehold on Italian media loosens. Reform of the sector is badly needed, if some way off. That could ultimately lure new players, such as Germany’s Bertelsmann.

UniCredit’s capital hike is a wager on Europe

14 Nov 2011

Given market nerves, the Italian lender’s plan to raise half its market cap from shareholders looks bold. For investors who have hung on this long, pumping in 7.5 bln euros is a bet that Italy can avoid disaster. But UniCredit’s deleveraging plan shows the broader economic risks.

Euro fate hangs on Super Mario Bros

14 Nov 2011

Even if Mario Monti can form a strong government in Italy, the euro zone is vulnerable to bank runs and a deflationary spiral. Stopping that is the role of the ECB’s Mario Draghi. The zone needs reform but looser monetary policy. With Berlusconi gone, maybe they can do a deal.

Berlusconi ouster isn’t like Arab Spring

14 Nov 2011

Some Italians see similarities with Mubarak or Gaddafi in the toppling of their PM. But while Berlusconi distorted democracy, he wasn’t a dictator. And he was removed by bondholders, not the people. If Italy is to reform, voters must acknowledge their complicity in his regime.

France fights a scary case of Italian flu

11 Nov 2011

The French bond market is starting to flash warning signals. The trauma of the Italian rout is partly to blame, but France’s own creditworthiness isn’t pristine either. If investors start to think of it as risky, the euro zone crisis will enter a whole new, dangerous phase.

Three ways to bring Italy back from brink

10 Nov 2011

An apparent U-turn by Silvio Berlusconi means there’s now a reasonable chance of a national unity government headed by Mario Monti. While that would be good, three more steps are needed to stabilise the country: a crack-down on “baby” pensions, a wealth tax and privatisation.

Euro zone shouldn’t revel in technocratic fantasy

9 Nov 2011

Italy and Greece may soon be ruled by technocrats with expertise but no political clout. That’s the wrong mix. In crisis, tough reforms must be backed by the legitimacy of a national unity government. Technocracy may look tempting, but you can’t take politics out of government.

Italy faces nerve-racking game of chicken

9 Nov 2011

Bond yields have shot through 7 pct. The PM’s resignation doesn’t instantly lead to a national unity government able to grasp the country’s problems. Bickering politicians will have to be brought into line by markets – and continued pressure from the rest of the euro zone.

Euro zone should prepare post-Berlusconi bazooka

8 Nov 2011

Germany and the ECB have been right to keep Italy on tenterhooks so long as it had a delinquent government. But even a credible new government will probably need help to get its borrowing costs under control. That means unleashing the central bank’s firepower in one form or other.