Italy Bank Bulls Say Bad Loan Panic Overdone as Stocks Slide

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Italian banks are being backed by some investors to withstand tougher European Central Bank rules on bad-loan provisioning that sent their shares tumbling, Bloomberg News reported. A 6.9 percent drop in a gauge of the nation’s lenders in the six days through Tuesday was blown out of proportion, according to Ronald Petitjean, a Paris-based fund manager at LA Francaise Inflection Point. With the International Monetary Fund increasing its growth forecasts for Italy on Tuesday, a resilient economy will disprove any concerns about the health of the country’s banks, he says. The index rebounded 2.3 percent on Wednesday. “The market over-reacted because the ECB’s new rule is only for new non-performing loans,” said Petitjean, who oversees about 1 billion euros ($1.2 billion) and owns Italian bank shares. “An improving macro will lead to a marked improvement in banks’ asset quality,” he said, adding that the rule is unlikely to be applied to existing bad loans. Read more.