To the corrective referendum on constitutional reform has swept the contrary vote of the italians. But this morning, contrary to what is predicted by some analysts, the apocalyptic, the sun rose in the beautiful Country, and there has been no invasion of locusts. Even the market, hear hear, he kept to the shock of the immediate resignation of Matteo Renzi. Watching in the complex, the reaction of the euro, spreads, yields and the Stock exchange, the only thing that’s really of concern is the banks.
As expected, in fact, is the banking sector to pay the highest price of the victory of the No in the referendum. Now the Country will open a phase of political uncertainty, fibrillation and financial fear to the estate of the banking system.
Unfortunately the Government has not addressed before the problem of the Italian banks deferring until last the search for a solution to MPS and company. Now, however, that something must be done for the strengthening of the capital base of the banks, the would rather the time to stand firm, stand strong and wait for the storm. what would you like to do Mark Morelli, managing director of MPS, the bank between today and tomorrow should give the green light to the capital increase from around 5 billion (less the value of the bond converted). the If you skip the save operation of the MPS, skip the MPS and with the bank of siena likely to miss a good part of the Italian banking system.
Referendum: the reaction of the market
With the announcement of the resignation of Matteo Renzi arrived shortly after midnight, the euro slips to share and 1.05 on the dollar, and then returned to 1.07 on Monday. The clear victory of the ” No ” that has prompted the premier to step aside, has also prompted investors to reposition on a scenario of uncertainty. After the speech of the premier the single european currency has rebounded in the obvious way. Also Piazza Affari does not seem overly upset by the outcome of the referendum: the FTSE MIB mid-morning, marks a timid rise dragged the FCA, Saipem, Azimuth, and other industrial, even if the day was characterized by strong volatility and several changes sign. In deep difficulties, above all the banking sector.
The spread, as expected, is on the rise, but at the moment remains well below the level of 200. The availability of the ECB to buy Italian State bonds for the phase uncertainty more acute, to be held under control, the spreads and returns.
According to Loris Centola, global head of private banking research at Credit Suisse, "in the short time we are going to see an expansion of the spread of Italian 20-50 basis points, well over the 200 points, and of course, sales on the stock, even if here the prices already served a victory of the No, and so I don’t expect a meltdown. With regard to the BTP, instead, this outcome was not embedded. The ECB could swab the most acute phase, buying more Italian securities than is the case today. Then it will be crucial for the message which will give after the meeting on Thursday: at this point you could extend the QE until September of next year. With regard to the banks, that they need to do a number of things, such as raise capital and sell non-performing loans, these processes are for the moment frozen.
in Short, the negative reaction of the finance to the victory of the No to the referendums has considerable proportions, nor worrying.
the trend of the next few weeks, however, will be marked by the way in which it will be managed the Italian political crisis. If the president of the Republic and the political parties will be able to indicate a way out of the impasse, the market will celebrate.
Referendum: what happens now for the banks?
As expected, the market has not suffered any shock to the victory of the No in the referendum. At Piazza Affari reigns volatility with the price list that opens up to -2% and then bounces above par. of The constant, however, the first meeting post-referendum is the deep red of the bank, the real victims of the resignation of the premier Renzi.
If there is someone on which will weigh negatively in the defeat of the Government, and the phase uncertainty are the Italian banks. Of the structural problems of Italian banks, we spoke in all the languages we have already said that these are not the responsibility of the U but to the Government you can blame the loss of precious time. The problems of the banking sector boiled and precarious balance were understated by the Government and never addressed as, however, the emergency situation would have required.
And now in the moment of greatest instability in the Country’s financial problems are not longer be deferred. The symbol of this situation is the MPS, the cross and delight of the Italian banking system. The third bank of the Country and among the oldest in the world, the bank of siena must, necessarily, bring to an end a rescue plan in two phases.
Passed the rock of the conversion of bonds in shares in MPS, and between today and tomorrow, the board should decide the price, amount and give the go-ahead to capital increase. Today the fund of the state of Qatar and other large investors would have been able to sign agreements to act as the anchor investor of the transaction by playing the role of a parachute for the entire operation. But having regard to the outcome of the referendum is likely that the Fund from Qatar this morning has unplugged the phone to not be tracked down by Mark Morelli.
The next few hours will be intense and decisive. In the plan of the bank there is the launch of the capital increase between the 7 and 8 December to close it before Christmas, but considered the outcome of the referendum, it is not excluded that the board of directors decides in extremis to take more time. But the operation must be done as soon as possible: the ECB has asked the MPS to strengthen the capital at the beginning of the summer, and is now breathing down the neck of the board of siena.
If the capital increase were to jump, the road to the MPS would be marked: State aid and resolution with bail-in. In recent days, in fact, has gone on the negotiation with the european authorities to put in place a plan B that foresees the nationalisation of the bank and a bail-in possible soft, for families and small investors, overwhelmed by the management of the sick of the institute.
But the eventual resolution of the MPS will result in a chain reaction on the entire system. Other banks are busy in the delicate operation: the Good bank still need to find a suitor and UBI banca, concerned, should, however, make a capital increase to support the investment; for the Popolare di Vicenza and Veneto banca studying the integration, but also a kind of bad bank, to free them from the suffering they continue to rise; Unicredit goes to a capital increase monstre 13 billion; Banco Popolare and BPM convolano wedding between the new hypothesis of a capital increase and non-performing loans in the growth.
Because each piece of this complicated puzzle go to place for the investors to come to believe in Italy and in the ability of the Italian banking system back on track. The failure of the MPS in this sense, it would certainly be an encouraging sign. If this is the end of 2016, brace yourselves for the beginning of the new year.
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