Banks, Financial

Banking app targets millennials who want help budgeting

Graduate debt, rent and high living costs have made it hard for millennials to save for a house, a pension or even a holiday. For Ollie Purdue, a 23-year-old law graduate, this was reason enough to launch Loot, a banking app targeted at tech-dependent 20-somethings who want help to manage their money and avoid falling […]

Continue Reading


Eurozone inflation climbs to highest since April 2014

A welcome dose of good news before next week’s big European Central Bank meeting. Year on year inflation in the eurozone has climbed to its best rate since April 2014 this month, accelerating to 0.6 per cent from 0.5 per cent on the back of the rising cost of services and the fading effect of […]

Continue Reading


Wealth manager Brewin Dolphin hit by restructuring costs

Profits at wealth manager Brewin Dolphin were hit by restructuring costs as the company continued to shift its focus towards portfolio management. The FTSE 250 company reported pre-tax profits of £50.1m in the year to September 30, down 17.9 per cent from £61m the previous year. Finance director Andrew Westenberger said its 2015 figure was […]

Continue Reading


Travis Perkins and Polymetal to lose out in FTSE 100 reshuffle

Builders’ merchant Travis Perkins and mining company Polymetal face relegation from the FTSE 100 after their recent performances were hit by political events. The share price of Travis Perkins has dropped 29 per cent since the UK voted to leave the EU in June, as economic uncertainty has sparked concerns among some investors about the […]

Continue Reading


RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

Continue Reading

Categorized | Banks, Equities

Italian banks fall fast on referendum jitters

Posted on November 28, 2016

Italian banks led sharp declines across the wider European financial sector on Monday, on concern about the risks to the financial system that could follow next weekend’s reform referendum.

Italians will vote on reforming the country’s constitution on Sunday, and centre-left prime minister Matteo Renzi has vowed to step down if the referendum is rejected, a result suggested by current polls

The prospect of political turmoil in the eurozone’s third-largest economy threatens plans to clean up Italy’s oldest bank Monte dei Paschi. Banks were at the forefront of selling from Milan, to Paris and Frankfurt and London.

All the constituents in the Euro Stoxx banking sub-index were in the red sparked by contagion fears for the wider sector, as it fell 1.4 per cent to a two-month low, outpacing a decline of 0.7 per cent on the main Euro Stoxx 600 index.

Milan’s FTSE MIB fell 1.4 per cent overall, a sharper decline than the FTSE 100’s 0.7 per cent fall in London and a 0.9 per cent loss for Frankfurt’s Xetra Dax.

“We see a non-trivial risk that a new, prolonged period of ineffectual governments leads to systemic instability in the medium term,” warned analysts from Deutsche Bank.

“A muddle-through scenario means a very low likelihood of significant reforms; in our view Italy’s economy will continue to perform poorly in both absolute and relative terms,” said Marco Stringa, strategist at Deutsche.

Unicredit — Italy’s most systemically important bank — was the biggest single faller, with its shares down 4 per cent, while Banco Popolare, Banca Popolare di Milano and Banco Emilia fell more than 3 per cent.

Senior bankers have told the FT they fear Mr Renzi’s resignation would deter private investors from pumping fresh funds to recapitalise lenders, leading to concerns they will need to be put under a new EU “resolution” mechanism that would force losses on creditors.

The reaction was less severe on capital markets. Italian subordinated bank bonds, the most risky exposure to the sector after equities, fell but many are still trading far above levels they touched earlier this year. A €1bn Unicredit subordinated bond was trading at 85 cents on the euro. In February it was trading at 71 cents. Similarly, an Intesa subordinated bond is at 94 cents, compared with February when it was below 86.

A “No” vote “would likely usher in a period of increased political uncertainty in Italy and would represent a major setback for economic reform efforts”, noted Elsa Lignos at RBC Capital Markets

“Italy continues to be a long-term risk for the euro area, but that is a two-year rather than a two-month trade,” said Ms Lignos.

Nonetheless, there were voices of support for the sector.

James Sym, an investor at Schroders, said of the selling: “We just feel it’s getting overdone. We’ve got to a level in the banking system where I think that’s broadly priced in.”

He added that the “big question” is the situation with non-performing loans held by Italian banks, and the discount rate used to value them.

“I sort of take a view that just as in 2012, 2013, there was a point where the market decided Spain had done enough provisioning. At some point we’re going to get to that point in Italy. It’s always the darkness before the dawn,” he added.