Headlines

Monte dei Paschi di Siena’s bonds have led heightened selling in Italian bank debt, as new policies mooted by the incoming populist government threaten to raise the cost of future funding for the sector, the Financial Times reported. The Italian government last year rescued the world’s oldest bank, which had to agree to a restructuring programme with EU authorities that included branch closures.

Bulgaria’s hopes of becoming the next member of the eurozone have been dealt a blow by the European Central Bank which has warned the EU’s poorest country has made minimal progress in joining the euro club, the Financial Times reported. In its latest biennial “convergence report” assessing non-euro economies, the ECB raised concerns over Bulgaria’s central bank independence, inflation dynamics and urged for “wide-ranging structural reforms”. Bulgaria has been considered the most likely 20th member of the single currency area.

Lawyers for jailed Congo Republic opposition figure Jean-Marie Michel Mokoko called on the International Monetary Fund (IMF) to make his release a condition for the approval of a bailout for the debt-crippled nation, the International New York Times reported on a Reuters story. Like other Central African oil producing countries, Congo has been hit by low crude prices. Several neighbors, including Chad and Gabon, have already secured bailouts from the IMF.

Santos Ltd. plunged the most since 2016 after rejecting Harbour Energy Ltd.’s $10.9 billion final offer and terminating talks, saying its proposal was too low and too risky, Bloomberg News reported. The Australian oil and gas producer said Tuesday its independent directors, managing director and chief executive officer unanimously rejected the proposal because it didn’t represent the full value of the company, as well as being too complex and high-risk. Oil prices and shares of its domestic peers have rallied 14 percent and 18 percent, respectively, since the initial proposal, Santos said.

By most accounts, Dubai’s biggest bank got a good deal when it agreed to buy Turkey’s Denizbank AS for $3.2 billion. The question is whether that’s enough to make up for entering a market under pressure from all sides, Bloomberg News reported. Emirates NBD PJSC is buying the lender from Russia’s Sberbank at a time when the country is struggling with a plunging currency, a wave of debt restructurings, looming elections and political meddling in the finance industry. The purchase is both Turkey’s largest M&A deal since 2012 and the Dubai bank’s biggest acquisition.

Turkey’s banks are at risk of losing their reputation as the crown jewel of the economy as the government’s single-minded focus on growth threatens to undermine profits and cause an uptick in bad loans, Bloomberg News reported. Lenders in one of the world’s fastest-expanding emerging markets are finding themselves at the center of President Recep Tayyip Erdogan’s ambitions of winning another election in an early vote called for June 24.

European high-yield debt was the world’s best-performing market in the decade that followed the financial crisis, surviving bailouts, crashes, and Brexit to deliver returns of 100 percent, Bloomberg News reported. Italian populists may turn out to be its greatest test. One fifth of the market is concentrated in the nation via companies like Telecom Italia SpA and Moby SpA, and the prevailing political wind presents a looming threat, according to UBS Group AG strategists.

State Bank of India, the country’s largest lender by assets, joined its private peers in shrugging off losses as investors believe the lenders have finally got a handle on bad loans, Bloomberg News reported. SBI’s shares surged to a six-week high after it reported a record loss on Tuesday, weighed down by a doubling in provisions for soured debt. A similar contrarian market reaction was seen after No. 2 private lender ICICI Bank Ltd. and smaller rival Axis Bank Ltd. reported poorer-than-expected earnings.

Some of Germany’s most prominent economists have joined forces to attack French president Emmanuel Macron’s proposals for deeper eurozone integration and have called on European leaders to set up a framework to allow countries to quit the single currency, the Financial Times reported. The criticism of Mr Macron’s reform agenda, which appeared in a letter in the Frankfurter Allgemeine Zeitung, highlights divisions within the EU over how to strengthen the bloc ahead of a crucial summit in Brussels next month.

The UK government ignored advice to put Carillion on its highest risk rating before its collapse in January, following pressure from board members of the now-bankrupt company that was a major supplier of outsourced public services, the Financial Times reported. Every government supplier that has contracts across departments and generates revenues of more than £100m a year is assessed according to a red-amber-green traffic light system. Suppliers most at risk of collapse are given a black status.