Parachute or contagion vehicle? The stop came to the stock market listing of Vicenza Bank calls into question the Fund Atlas, the lifeline for troubled banks, plagued by capital increases that are nearly empty on the market and sunken by the weight of impaired loans. If things get worse for these banks, just as is happening in Vicenza, the Fund should step in and fulfill one of its tasks, namely to support the recapitalization. So for the former Banca Popolare di Vicenza, which alone has faced the flop of the new capital subscription, Atlas will be the saving hand because it will ensure the entire roof, going to subscribe for all the shares for an outlay of 1.5 billion euro . Atlas will save Vicenza, but is likely to embarrass two solid institutions, UniCredit and Intesa Sanpaolo, that will support the main effort. What will happen if in fact, as will happen for the Bank of Vicenza after the stop in Piazza Affari, the Fund will have to bring up consistently banks that contribute to its functioning?
According to Professor Nicola Borri, an economist at the University Luiss Guido Carli University and an expert on Italian and European banking system, the risk is that Atlas “infected relatively healthy institutions”. “Unicredit and Intesa – explains Borri Huffington Post – have their problems, but they are not infected: if you have to put money in very complicated situations are likely to become infected in their affair. The Fund had been built to reduce systemic risk, but is likely to increase it. ” The markets today gave us a taste: after the stop in Vicenza the largest stocks of the sector, by UniCredit to BPM, via Ubi, MPS and Banco Popolare, have recorded heavy losses in the stock market.
The greater the involvement of the most solid financial institutions in supporting the efforts of the Atlas Fund, the higher the risk that markets perceive the entire Italian banking system and above all more consistent is the pressure of UniCredit and Intesa. Marcello Messori, director of Luiss School of European Political Economy, linking the collapse of bank shares in Piazza Affari with this reasoning: “It ‘inherent in the mechanism by which it works Atlas that the strongest financial intermediaries have a position help against of the weak to look for them to strengthen them: but the more this involvement will have to be strong and deep, the more it will raise transaction costs. ” That’s why, he says, the “collapse of bank shares today is a sign that there is this concern, the concern that there should be greater involvement by the more strong and solid Italian banking sector.”
Now that the fund Atlas is called to enter into operation at full capacity problems begin to emerge. After Vicenza in all likelihood it will be up to Veneto Banca and even then you’ll likely find Atlas had to do everything myself, compensating for the inability of the fragile banks to gather support and capital market. Again UniCredit and Intesa would be called to line up on the front row. The chief executive of Intesa, Carlo Messina, has sided on a wait position, saying that “we will see in a few days” if we need assistance from the Fund and declaring himself “increasingly confident” the successful completion of the bank recapitalization , but few are betting into a success.
A trigger this tensioning mechanism on the stock market is the Bank of Vicenza was today. “The weather is bad but you have to go, I’m sure it will be a success.” On March 5, the managing director of the bank, Francesco Iorio, spoke these words to convince the shareholders’ meeting to give the green light to the listing. That optimism, that collided with the anger of shareholders at a meeting on fire between screams and protests, was now struck down by the Italian Stock Exchange: For Vicenza there is no place in Piazza Affari because “there are no grounds for ensure the smooth functioning of the market. ” No one comes just days before the subscription of the capital increase flop, which stopped at 7.66% stake, or about 115 million euro on an operation by the total value of 1.5 billion. Two failures that make it clear that the bank, alone, did not convince all the markets on the choices made.
Less than two months ago for the Bank of Vicenza they were dramatic days. The shareholders’ meeting had given a green light suffered the listing, along with yes for the transformation in Spa and the recapitalization, conditions that the ECB had posed as unavoidable and that the same bank leaders were presented as inevitable not to run in liquidation rather than in the bail-in, the internal saving, or in the event of an unpacking. Then the Fund Atlas was nowhere: today without this vehicle recapitalization would be impossible. The Fund, which will underwrite the entire capital increase and by virtue of this operation will own 99.33% of the shares to “support the restructuring, the revival and enhancement of the bank, the interest of having as priority its investors, “explains Qauestio Sgr, the company that manages the fund.
What the Fund Atlante even succeed for the moment to raise is the adventure of the Vicenza Bank in Piazza Affari. Goodbye dreams of glory. Italian Stock Exchange explained his refusal, summed up in a concept: the floating little that you created on the title. The numbers, more than any other element, attest to the lack of appeal that has aroused the operation: 4.97% of the subscription has been supported by Mediobanca, 2.86% from existing shareholders, 0.36% from the general public and 0, 10% of nine institutional investors. Added together make 7.66% compared with a commitment of the Fund Atlas equal to 91.72% of the capital, which now come to hold almost all of the shares. To land on the market needed a free float of 25%, a figure very far away for a bank that will now have to deal with an uncertain future.
Where to go now Banca di Vicenza? Vicenza The Institute is leaked tranquility: some sources explain Adnkronos that “the important thing was that the bank was put to safety and now is safe.” Concept, that of securing, also shared by UniCredit, through the CEO. Federico Ghizzoni pointed out that “the important thing is that the bank has enough capital to be able to work quietly and this goal has been achieved.” A Huffington Post outline the possible scenarios that open now for the bank is Borri. “There is a possibility – he explains – that he the Fund face Atlante by private equity, that is, companies that buy a bank, restructures and sells: the Fund, on the other hand, has a relatively short horizon, and then can seek to fix it a bit ‘and put it back on the market. ”
Then there are, according to the economist, the other two options. The Fund Atlas may not stop here: it could also buy Veneto Banca and “become a kind of bank holding company, trying to merge the two banks to create a new reality.” The third possible scenario foresees a more challenging involvement by the Atlas partners and in particular UniCredit and Intesa: according to economist of the Luiss may decide to incorporate Vicenza and then possibly Veneto Banca. The great fear is now called contagion. The markets reacted negatively, bank stocks plummeted. The Atlas umbrella holding, but those who are below and is called to handle it could make a lot of effort, to reach out to unwanted risks that are now coming to the surface.
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