Italy

Banca Monte dei Paschi di Siena SpA just can’t seem to put its troubles behind it. After more than a year of digging itself out from a collapse that ended in a state takeover, the Tuscan lender faces renewed concerns about its capital and profitability, Bloomberg News reported. Along with Banca Carige SpA’s struggles, that’s adding to the perception that Italian banking at large is still far from fixed. Shares of the world’s oldest bank dropped in Milan trading after the European Central Bank highlighted weaknesses in the Italian lender’s capital and profitability.

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Banca Monte dei Paschi di Siena SpA is preparing to sell covered bonds and will contact possible investors as soon as next week, a person with knowledge of the matter said. Monte Paschi is attempting to issue the debt after it was unable to complete the second tranche of a bond sale last year amid market turmoil, Bloomberg News reported. The lender said in a statement late Friday that the European Central Bank warned in a letter that its capital position was weaker after abandoning last year’s sale.

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Italy’s populist leaders just blinked again. Faced with a potential bank failure that could wipe out thousands of depositors in deputy prime minister Matteo Salvini’s northern base, the cabinet approved state guarantees for any future bond issues by cash-strapped Banca Carige and signalled its support for a possible recapitalisation, The Irish Times reported.

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Eurozone supervisors have appointed temporary administrators to troubled Italian lender Banca Carige after a majority of its board members resigned on Wednesday. The European Central Bank announced the decision to appoint three temporary administrators and a surveillance committee to replace Banca Carige’s board of directors and “take charge” of the lender, after executives quit and the mid-sized bank missed a deadline to shore up its financial health, the Financial Times reported.

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Italy’s deal with the European Union to defuse its simmering budget dispute is adding to concerns about the country’s real economic problem: a lack of growth, the Wall Street Journal reported. By reining in its spending plans under pressure from financial markets and the EU’s Brussels-based executive, the European Commission, Rome has avoided EU disciplinary proceedings for now. But Italy’s antiestablishment government is also left with few policy plans for boosting growth in a stagnant economy.

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Italy’s finance ministry said that it has agreed on a compromise with European Union authorities over the country’s budget deficit, resolving a dispute between Rome’s populist government and EU fiscal enforcers that has vexed financial markets for months, the Wall Street Journal reported. The agreement, which wasn’t confirmed yesterday night by the EU executive, the European Commission, would allow Italy to avoid an EU disciplinary procedure for now.

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The concessions offered by Italy’s government on its planned budget are on the right track but may not be enough to placate Brussels, the EU’s economy commissioner has warned. “It is a step in the right direction but we are not there yet, there are still steps to be taken, perhaps on both sides,” Pierre Moscovici said on Thursday. Rome has proposed cutting its planned budget deficit for 2019 to 2.04 per cent from 2.4 per cent of gross domestic product, the Financial Times reported.

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Italy’s rail company Ferrovie dello Stato (FS) is working to get airlines easyJet or Delta involved in the rescue of ailing carrier Alitalia, Industry Minister Luigi Di Maio was quoted as saying by union sources on Wednesday. Last month state-appointed commissioners running Alitalia accepted a binding purchase offer by FS, Reuters reported. The flagship airline had been put on sale after being in special administration since early last year.

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Italy’s government will extend to the end of June the deadline for Alitalia to repay a 900 million euro ($1 billion) bridge loan, Italy’s Deputy Prime Minister Luigi Di Maio said on Friday. The current deadline is Dec. 15, but Di Maio said the government would change the date in a decree to be approved on Monday, Reuters reported. The loan was given to the airline, which is under special administration and is being run by state commissioners, to keep it afloat until it can restructure and find partners.

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Italy has bought back €3.2bn of its short-dated debt in a move that was financed by tapping an existing three-year bond, the Financial Times reported. The Italian Treasury said in a statement that the rationale for the move was “to improve the liquidity and the efficiency of the secondary market for government securities”. The €3.2bn of new three-year debt was sold via syndication on Thursday by re-opening the October 2021 bond, which carries a 2.3 per cent coupon. It is Italy’s first syndicated deal since January, and its last debt sale of this year.

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