Italy

Investors’ next political test is the French election, but many are zeroing in on a different European risk for global markets: Italy. French bonds and shares sold off this week as investors focused again on the country’s presidential election, a two-round vote that begins on April 23 and has triggered concerns of a win for anti-euro candidate Marine Le Pen. Italian bonds also came under pressure and continued to weaken on Wednesday, even as French debt rallied, The Wall Street Journal reported.

Most bad loans held by Italian banks do not need to be sold immediately, the governor of the Bank of Italy said on Tuesday, in a bid to quell pressure on banks saddled with soured credit. In absolute terms, Italy is the EU country with the highest level of non-performing loans (NPLs) on bank balance sheets, data from the European Banking Authority (EBA) show, a burden that reduces their ability to lend to companies and households, Reuters reported.

ABI, the Italian banks’ association, reckons that 80% of the growth of NPLs can be attributed to the civil-justice system (by far the biggest single factor), sluggish economic growth (the next biggest) and taxation, The Economist reported. On average a bankruptcy takes 7.4 years. Only one-quarter of cases are resolved in less than two years. Some last more than two decades. Bad loans have quadrupled in value since 2008, notes Andrea Mignanelli of Cerved, a data provider. But no bank has quadrupled their staff to manage them. Lenders have been loth to sell their loans.

Italy's Banca Popolare di Vicenza posted a 1.9 billion euro (1.60 billion pounds) loss for 2016 and said it was bleeding deposits, raising doubts over whether regulators will deem the regional bank viable and approve its request for state aid. Popolare di Vicenza and local peer Veneto Banca this month asked the Italian government for a bailout, following in the steps of Italy's fourth-largest lender Monte dei Paschi di Siena, the International New York Times reported on a Reuters story.

A quarter of a century ago, Italy was in a sea of troubles that invites a comparison with today’s storms, the Financial Times reported. The party political system was disintegrating. A gigantic corruption scandal pervaded the highest levels of public life. Rapidly increasing government debt was crushing the economy. Citizens despaired of the state’s ability to uphold law and order.

Italy has abolished voucher payments for workers, which were highly popular with employers, to avoid a bruising referendum championed by the country's main union, Prime Minister Paolo Gentiloni said on Friday. Payment by vouchers was introduced in 2008 as an experiment for seasonal farm labourers. The flexible and unregulated form of payment was aimed at encouraging bosses to stop hiring workers on an illegal, ad hoc basis, the International New York Times reported on a Reuters story.

Less than three years after Etihad Airways saved Alitalia SpA from bankruptcy, the Italian airline is once again on the brink, The Wall Street Journal reported. After spending €400 million ($427 million) to buy effective control of Alitalia in 2014, the Abu Dhabi-based carrier launched a much-ballyhooed effort to improve the Italian airline’s service, expand its international routes and make the domestic business leaner. But the drive has done little to push up passenger numbers or beat back fierce competition from low-cost carriers, leaving Alitalia at risk of bankruptcy.

The fate of Europe’s biggest steel plant will edge closer towards resolution when a deadline falls on Monday for final bids to take control of the troubled facility in southern Italy, the Financial Times reported. The giant Taranto works, which has been at the centre of a saga involving environmental disaster, insolvency and temporary nationalisation, forms the core of the Ilva business up for sale by the Italian government. At stake are not just thousands of jobs, but a region’s industrial heritage and a pillar of Italy’s manufacturing sector.

The deadline for bids on the troubled Italian steelmaker Ilva, the owner of Europe’s largest steelworks, has been pushed back until next week, the Financial Times reported. Final offers to acquire the company, which has been at the centre of a saga involving environmental disaster, insolvency and temporary nationalisation, had been due on Friday. But a spokesperson for Ilva confirmed to the Financial Times that the cut-off would be delayed to Monday.

There’s been sharp selling pressure on eurozone government bonds lately, led by Italy and concerns about its future in the Eurozone, The Wall Street Journal reported on an editorial. By the beginning of the year Italian government yields rose 40 basis points over German Bunds, a 25% increase. The main pro-European Union party, Matteo Renzi’s Democrats, are on the verge of a breakup. Euroskeptic parties are on the rise.